tier 1 model financial statements - deloitte us...and flags australian-specific considerations...
TRANSCRIPT
Tier 1 model financial statements
Financial reporting periods ending
on or after 31 December 2020
Using this document This document is structured as follows
Australian specific guidance
This section provides pertinent information for financial reporting at 31 December
2020 including whatrsquos new for the current reporting season a summary of new and
revised pronouncements and reporting deadlines It also explains in more detail how
to use the remaining sections in developing best practice disclosures in your financial
reports
Core financial statements
This section contains the core IFRS disclosures that apply to all financial statements
The core financial statements reproduce the global IFRS model financial statements
and flags Australian-specific considerations arising in relation to the illustrated
disclosures using icons and explanations
Appendix 1 ndash Areas of the model financial
statements affected by climate change and
COVID‑19
This appendix gives an overview of all disclosure areas impacted by climate change
andor COVID-19 These impacts are also highlighted in the core financial statements
with icons
Appendix 2 ndash Australian-specific disclosures
This includes the various reports required under the Corporations Act 2001 additional
Australian Accounting Standards disclosures and ASX Listing Rules requirements
Tier 1 model financial statements | Australian specific guidance
iii
Australian specific
guidance
Tier 1 model financial statements | Introduction
i
1 Introduction
The December 2020 financial reporting
season again is set against a background of
uncertainty and challenges
The impacts of the COVID-19 crisis on both the local and global economies
combined with the uncertainties it has created continues to present significant
challenges in preparing financial reports for December
An important response to these challenges is to continue to enhance the
transparency of the financial report so that readers understand the impacts of the
crisis ndash both positive and negative ndash on the entity and the decisions judgements
and uncertainties involved in compiling the financial report
ASIC continues to focus on the disclosures made in the financial report and
entities can expect regulatory scrutiny to be rigorous Early planning and timely
preparation of position papers will enable management and directors to make
informed decisions on key estimates and judgments and will support the quality of
the financial information provided to the market
Transparency is particularly important in the following areas
bull Clear disclosure about the sources of estimation uncertainty arising in the
financial statements details of the assumptions made and sensitivity and
scenario analyses
bull Disclosure of how impairment assessments have been impacted by COVID-19
including disclosure about key assumptions and methods used when testing
impairment
bull The impacts of any government support received are clearly understandable
and comprehensively disclosed including accounting policies and amounts
received
bull Any non-IFRS profit measures are appropriately derived consistent with ASIC
guidance and reconciled to financial statements disclosures
bull Disclosures about fair value measurements provide insight into valuation
techniques and significant unobservable inputs used and provide sensitivity
analyses where appropriate
bull Going concern and subsequent events are appropriately considered and
disclosure made where necessary
bull Disclosure to ensure readers of the financial statements understand how the
entity manages its liquidity risk including any use of working capital
enhancement or management techniques (such as supplier financing)
In these challenging times each entity must ensure that the impacts of COVID-19
and other events and circumstances are transparently disclosed throughout the
financial statements
November 2020
ldquoTransparency
remains critical in
responding to
uncertain timesrdquo
Alison White
National Leader
Accounting Technical
Tier 1 model financial statements | About this publication
ii
2 About this publication
These model financial statements are designed to allow lsquoTier 1rsquo entities to
understand and efficiently meet financial reporting obligations
21 Purpose The Deloitte Tier 1 model financial statements contained in the main section of this document illustrate the presentation and
disclosure requirements of IFRSs for the year ended 31 December 2020 by an entity that is not a first-time adopter of IFRSs They
comprise consolidated financial statements which illustrate the impact of the application of IFRSs that are mandatorily effective for
the annual period beginning on 1 January 2020
The Deloitte model IFRS financial statements however do not illustrate the presentation and disclosure requirements specific to
annual reports prepared in Australia Therefore Appendix 2 to the model financial statements has been designed by Deloitte
Touche Tohmatsu Australia to assist users with the preparation of annual reports in Australia in accordance with
bull Provisions of the Corporations Act 2001
bull Accounting Standards and Interpretations issued by the Australian Accounting Standards Board
bull Other requirements and guidelines current as at the date of issue including ASX Listing Rules ASIC Class OrdersCorporations
Instruments Regulatory Guides and Media Releases
22 Effective date This guide includes reporting obligations and illustrative disclosures that are effective for financial years ending on 31 December
2020
Unless otherwise noted the information in this guide has been updated for developments to 17 November 2020
23 Abbreviations The following abbreviations are used in this guide
Abbreviation Description
AASB Australian Accounting Standards Board
Accounting Standards Australian Accounting Standards issued by the Australian Accounting Standards Board
ASA Australian Auditing Standard issued by the Auditing and Assurance Standards Board
ASIC Australian Securities amp Investments Commission
ASIC-CO ASIC-CI Australian Securities and Investments Commission Class OrderCorporations Instrument issued
pursuant to s341(1) of the Corporations Act 2001
ASIC-RG Australian Securities and Investments Commission Regulatory Guide
ASX Australian Securities Exchange
ASX-LR Australian Securities Exchange Limited Listing Rule
ASX-GN Australian Securities Exchange Limited Guidance Note
ATO Australian Tax Office
Corporations Act Corporations Act 2001
ED Exposure Draft issued by the Australian Accounting Standards Board
Tier 1 model financial statements | About this publication
iii
Abbreviation Description
GPFS General purpose financial statements
IASB International Accounting Standards Board
IFRSs International Financial Reporting Standards
Int Interpretation issued by the Australian Accounting Standards Board
ITAA 1997 Income Tax Assessment Act 1997
s Section of the Corporations Act 2001
SPFS Special purpose financial statements
Tax Administration Act Tax Administration Act 1953
Reg Regulation of the Corporations Regulations 2001
Understanding source references in these model financial statements
The source references included in this model financial report generally refer to the international versions of pronouncements
rather than their Australian equivalents Accordingly
bull References to ldquoIFRS Xrdquo should instead be read as a reference to the Australian equivalent ldquoAASB Xrdquo
bull References to ldquoIAS Xrdquo should instead be read as a reference to the Australian equivalent ldquoAASB 10Xrdquo (where X is less than
10) or ldquoAASB 1Xrdquo (otherwise)
bull References to ldquoIFRIC Xrdquo should instead be read as a reference to the Australian equivalent ldquoInterpretation Xrdquo
bull References to ldquoSIC Xrdquo should instead be read as a reference to the Australian equivalent ldquoInterpretation 10Xrdquo (where X is
less than 10) or ldquoInterpretation 1Xrdquo (otherwise)
Tier 1 model financial statements | Whatrsquos new in financial reporting
iv
3 Whatrsquos new in financial
reporting
This section provides a high level overview of the key financial reporting
considerations for financial reporting periods ending on 31 December
2020
Roadmap to this section
Topic What is covered
31 Summary of changes An easy to follow summary of the key changes and other considerations for financial reporting at
31 December 2020
32 Financial reporting
considerations of COVID-19
Broad areas of consideration in relation to the impacts of COVID-19 (including economic effects and
the impacts of government responses) on financial reporting and details of additional resources
available to entities
33 Australian specific
considerations
A brief summary of key changes and other considerations arising in Australia due to law and
regulatory changes and developments
34 Other developments Information about other developments that may impact financial reporting
35 Details of new and revised
financial reporting
pronouncements
More detailed summaries of key new pronouncements legislation and regulatory developments
(including those that have application in future reporting periods) with links to in-depth information
The information in this section was prepared as of 17 November 2020 and entities should ensure any developments
occurring from this date to the date of authorising of the financial statements are appropriately taken into account This
publication is updated twice yearly (for June and December reporting periods) and the latest edition can be found at
wwwdeloittecomaumodels
As occurs so often with changes to accounting standards and financial reporting requirements some of the new or revised
pronouncements and other information noted in this section may have a substantial impact on particular entities Therefore it
is important that the information in this section is carefully reviewed for any potential impacts or opportunities
Tier 1 model financial statements | Whatrsquos new in financial reporting
v
31 Summary of changes 311 Relevant to financial reports at 31 December 2020 The following considerations should be considered for financial reports at 31 December 2020
Whatrsquos changed Who is affected What needs to be considered
Overall considerations
The impact of the COVID-19 and
government responses to the
pandemic may have a pervasive
impact on financial reporting
Virtually all entities are
affected in some way
An important response to these challenges is to enhance the
transparency of the financial report so that readers understand
the impacts of the crisis on the entity and the decisions
judgements and uncertainties involved in compiling the financial
report More information and available resources are available in
section 32
Disclosure considerations
The AASB and AuASB have released
guidance on the impact of
climate-related and other emerging
risks in financial reporting
Entities that are exposed to
material climate-related or
other emerging risks or have
investors with an expectation
that climate-related or
emerging risks would
influence their decisions
The AASB and AuASB have stated that entities should adequately
consider climate-related risks and other emerging risks in their
financial reporting Whilst the impacts of COVID-19 are likely to be
more significant in the current reporting periods financial
reporting areas that may be impacted include asset impairment
changes in useful lives valuation of assets provisions and
contingent liabilities and expected credit losses (see section 341)
Entities should provide transparent
disclosures about auditor
remuneration
All entities Transparent information about auditor remuneration improves
the quality of financial reporting (see section 335)
Underlying accounting changes
A number of less significant
amendments to Accounting
Standards become applicable for the
first time
Various entities depending
upon the nature of the entityrsquos
activities and transactions
Although these largely represent minor changes in some cases
particular entities may be impacted It is important to understand
the nature and detail of these changes to determine if they could
significantly impact each entity (see section 352)
Other considerations
The tax legislation governing which
entities are required to prepare
general purpose financial statements
has changed and applies to income
years and periods beginning on or
after 1 July 2019
Corporate tax entities that are
members of large groups (or
large in themselves) which
have not previously been
considered lsquosignificant global
entitiesrsquo due to a lack of
consolidated financial
statements or due to the
application of accounting
consolidation exemptions
Impacted entities may need to prepare GPFS at 31 December
2020 (see section 332)
Changes in smalllarge proprietary
company thresholds effective for
financial years beginning on or after
1 July 2019
Proprietary companies
incorporated under the
Corporations Act
The thresholds for the determination of whether a proprietary
company is small or large have been doubled meaning less
entities will be required to prepare and lodge financial reports
under Part 2M3 of the Corporations Act (see section 333)
The ASX Listing Rules and guidance
have been updated
Entities listed on the ASX The majority of the changes made to the ASX Listing Rules and
guidance apply from 1 December 2019 and must be considered
by entities in ensuring compliance with their listing obligations
(see section 334)
Tier 1 model financial statements | Whatrsquos new in financial reporting
vi
Whatrsquos changed Who is affected What needs to be considered
Other considerations (continued)
The ASX Corporate Governance
Principles and Recommendations
have been updated
Entities listed on the ASX The ASX Corporate Governance Principles and Recommendations
have been updated and mandatory apply for the first time at
31 December 2020 (see section 334 and the summary of
changes starting on page 282)
The above table is a high-level summary and each entity will be affected differently Accordingly financial report preparers
should consider their own specific circumstances when preparing their financial reports and ensure they fully consider all the
requirements on the following pages
Tier 1 model financial statements | Whatrsquos new in financial reporting
vii
32 Financial reporting considerations of COVID-19 321 Transparency is key to reporting The impacts of the COVID-19 crisis on both the local and global economies combined with the uncertainties it has created
introduces significant challenges in preparing financial reports for 31 December 2020
An important response to these challenges is to enhance the transparency of the financial report so that readers understand the
impacts of the crisis on the entity and the decisions judgements and uncertainties involved in compiling the financial report
One of ASIC key focus areas for June 2020 financial reporting was disclosure Entities can expect regulatory scrutiny to continuing
to be rigorous Early planning and timely preparation of position papers will enable management and directors to make informed
decisions on key estimates and judgments and will support the quality of the financial information provided to the market
Transparency is particularly important in the following areas
Significant judgements and estimates
The COVID-19 crisis has led to more variability and uncertainty underlying the preparation of the financial report As a result a
broader range of disclosures in both full year and half-year reports may be required including consideration of AASB 101
Presentation of Financial Statements paragraphs 122 125 and 129 amongst others) These disclosures may include
bull Sources of estimation uncertainty
bull Assumptions made
bull Sensitivity and scenario analysis
Key estimates and judgments will differ from entity to entity but most commonly include impairment of assets fair values of
investment property and investments expected credit losses of loans and receivables recovery of deferred tax assets and the
assessment of the entityrsquos ability to continue as a going concern
Entities should also take care to ensure that assumptions relating to future cash flows are consistent across the different estimates
and judgments and any differences are attributable to different requirements of the relevant accounting standard
The broader financial reporting package should also address how the business is impacted by COVID-19 its strategies in response
and its prospects This may require discussion of the underlying drivers of financial performance strategies and risks impacts on
supply and demand covenant compliance and lending arrangements and liquidity management (either in the financial statements
or the operating and financial review)
Impairment The impacts of COVID-19 may be pervasive to an entityrsquos impairment testing under AASB 136 Impairment of Assets and users will be
looking to the financial statements more than ever to understand the impact of COVID-19 on asset values
The most challenging area of the impairment test is likely to be making reasonable and supportable estimates of cash flows In
contrast to prior tests which may have been determined using a single estimate of cash flows over the forecast period entities may
now need to use a weighted probability approach to cash flows which considers a range of possible scenarios on the speed at
which recovery is expected as well as the level to which business activities are expected to return Terminal value cash flows and
long term growth rates may also be more modest than previous estimates
Given the COVID-19 crisis more disclosure is expected and may include
bull Key assumptions
bull Description of approach to each of the key assumptions whether they reflect past experience whether they are consistent
with external sources of information and if not how and why they differ from past experience or external sources
bull Period of projected cash flows growth rates in the terminal value and discounts rates
bull Sensitivity analysis where a reasonably possible change in a key assumption could cause impairment
bull Scenario analysis including possible recovery outcomes
Tier 1 model financial statements | Whatrsquos new in financial reporting
viii
Government support Where the entity has taken advantage of the various government COVID-19 support packages such as JobKeeper or loan
guarantees it is important the nature and impacts of these schemes are clearly disclosed
Readers of the financial statements should be able to understand
bull What support the entity has received
bull How the support has been accounted for
bull How the support has impacted the financial position financial performance and cash flows of the entity including where
appropriate areas such as segment reporting impairment and operating and financial review
Non-IFRS profit measures
Information about the impact of COVID-19 on the entityrsquos results is useful to investors and it is important to disclose the underlying
drivers of results in the operating and financial review However ASIC is concerned that entityrsquos may disclose non-IFRS profit
measures that purport to show the result had COVID-19 not occurred and has therefore published an FAQ to provide additional
guidance
ASICrsquos view is that any non-IFRS profit measures should be unbiased and not used to avoid presenting lsquobad newsrsquo to the market
Measures purporting to show the result had the impact of the COVID-19 pandemic not occurred are likely to be misleading as they
will be hypothetical and may not show the actual performance of an entity It may also not be possible to reliably identify and
separately quantify the impact of the COVID-19 pandemic
Furthermore ASIC has stated that presenting a split of profit or loss between pre-COVID-19 and post-COVID-19 periods is
problematic and can be potentially misleading
Going concern
Consistent with the conclusion reached by the IFRS Interpretations Committee in July 2014 disclosure is required when an entity
concludes there is no material uncertainty regarding its ability to continue as a going concern but reaching this conclusion involved
significant judgement This requires disclosure of the significant judgments made and is important to provide users of the financial
statements with enough information to understand the pressures on liquidity viability and solvency
The AASB and AUASB have issued a joint publication on the impacts of COVID-19 on going concern and related assessments which
includes a section on going concern disclosures in various scenarios
Potential disclosures where there is significant judgment in determining whether a material uncertainty exists (or not) or where it is
determined that a material uncertainty does exist may include
bull Commentary on the events or conditions (eg deterioration in the financial results working capital or cash constraints) that
indicate the uncertainties exist at or arose post the balance date and the severity of the entityrsquos current financial position
bull Commentary on managementrsquos plans and options (eg capital raising refinancing or cost reductions etc) to mitigate the
financial position and whether they are within managementrsquos control or subject to third party actions the status of the plans
and options and their interdependency
bull Commentary on the feasibility of the plans or events that need to occur for the outcomes to be positive and why the
outcomes are probable
bull Based on the above
‒ A summary of the existence of material uncertainty and therefore the entity may be unable to realise its assets and
discharge its liabilities in the normal course of business or
‒ Significant judgements in managementrsquos evaluation that no material uncertainty exists eg evidence that plans are
effective additional financing waiver of covenants loan guarantees government grants
bull Other relevant information (eg interface with contingent liabilities such as legal claims)
Tier 1 model financial statements | Whatrsquos new in financial reporting
ix
Subsequent events Each subsequent event should be assessed in accordance with AASB 110 Events After the Reporting Period to determine whether it
provides evidence of conditions that existed at the end of the reporting period (and therefore should be adjusted for in the
financial statements) or whether it reflects a change in conditions after the reporting date (and therefore disclosure is required)
For example if a debtor is placed into voluntary administration soon after the reporting date should this be taken into account in
determining the expected credit losses at reporting date We expect this assessment may involve significant judgement for the
31 December 2020 reporting period and therefore management should allow sufficient time in its reporting calendar to consider
such events
If non adjusting events are material an entity is required to disclose the nature of the event and an estimate of its financial effect
The estimate does not need to be precise It is preferable to provide a range of estimated effects as an indication of the impact
rather than to not provide any quantitative information at all However where the quantitative effect cannot be reasonably
estimated a qualitative description should be provided along with a statement that it is not possible to estimate the effect
Fair value measurements The impacts of COVID-19 may require changes in valuation techniques (eg market transactions may not be available) and changes
in categorisation of fair value measurements in the lsquofair value hierarchyrsquo (often to lsquoLevel 3rsquo) This is particularly relevant for direct
and indirect investments in properties and infrastructure and other unlisted investments
AASB 13 Fair Value Measurements requires disclosures about both recurring and non-recurring fair value measurements
particularly those categorised as lsquoLevel 3rsquo in the fair value hierarchy and may include the following disclosures
bull Valuation techniques used changes in those techniques and reason for change
bull Quantitative information about the significant unobservable inputs used in the fair value measurements
bull Narrative description of sensitivity to changes in unobservable inputs
bull Sensitivity analysis of unobservable inputs that change fair values significantly
Liquidity risk management Liquidity disclosures including how the entity manages its liquidity risk are particularly important in this time of uncertainty
Entities should consider how the use of working capital enhancement or management techniques is reflected in the entityrsquos
disclosure of its liquidity risk management as required by AASB 7 Financial Instruments Disclosures
In addition if outflows of cash (or another financial asset) could occur significantly earlier than indicated in its summary
quantitative data about its exposure to liquidity risk entities should state this fact and provide additional disclosure For example
this may arise where there is uncertainty about continued compliance with covenants under financing arrangements
Entities should also consider
bull The specific disclosure requirements for transfers of financial assets as required by AASB 7 when financial assets are sold to
fund working capital needs
bull The accounting policies and judgements applied in determining the balance sheet and cash flow statement presentation of
amounts due and paid when supplier finance and reverse factoring arrangements are used
This could include separate presentation of amounts payable key terms of arrangements accounting judgements applied in
determining whether to present such amounts as payables or borrowings and how risks and exposures are managed
Tier 1 model financial statements | Whatrsquos new in financial reporting
x
322 Lessee rent concession amendment The IASB and AASB have made amendments to provide lessees with a practical expedient not to assess whether COVID-19-related
rent concessions are lease modifications and allows lessees to account for such rent concessions as if they were not lease
modifications
The practical expedient will only apply to rent concessions as a direct consequence of COVID-19 that meet all of the following
conditions
bull The change in lease payments results in revised consideration for the lease that is substantially the same as or less than the
consideration for the lease immediately preceding the change
bull Any reduction in lease payments affects only payments originally due on or before 30 June 2021
bull There is no substantive change to other terms and conditions
A lessee that applies the practical expedient would generally account for
bull The forgiveness or waiver of lease payments as a variable lease payment The lessee would therefore derecognise that part of
the lease liability that has been extinguished by the forgiveness of lease payments with a corresponding credit in profit or loss
the timing of which will depend on the facts and circumstances
bull A change in lease payments that reduces payments in one period but proportionally increases payments in another (such that
there is no change to the overall consideration for the lease and only the timing of individual payments changes) by
continuing to recognise interest on the liability and reduce that liability for payments made to the lessor This will necessitate
a recalculation of the amortisation table using the original discount rate
If the lease payments are reduced in one period but increased by a lower amount in a later period (hence the total consideration is
lower) the change in lease payments incorporates both a forgiveness of payments and deferred lease payments
The lease liability recognised by a lessee applying the practical expedient would represent the present value of future lease
payments owing to the lessor The lessee also discloses the amount recognised in profit or loss to reflect changes in lease
payments arising from COVID-19-related rent concessions
The amendment applies on a modified retrospective basis for annual reporting periods beginning on or after 1 June 2020
Many entities have negotiated or are still in the process of negotiating rent concessions as a result of the COVID-19 pandemic
Entities intending to rely on the practical expedient should put in the place the necessary process to adopt the amendments early
eg for entities reporting under the Corporations Act appropriate directorsrsquo resolutions for early adoption must be made under
s334(5) (see section 352)
Disclosures on early adoption of the COVID-19 rent concession amendment
An illustrative example of the disclosures made on early adoption of AASB 2020-4 Amendments to Australian Accounting
Standards ndash Covid-19-Related Rent Concessions can be found in Appendix 2 in Note 2 on page 248
Tier 1 model financial statements | Whatrsquos new in financial reporting
xi
323 Resources available Outlined below are various resources that may assist entities in understanding and responding to the financial reporting
considerations arising from the COVID-19 crisis
Resource Details
Key Deloitte publications
Appendix 1 to this publication Provides a summary of the disclosures in financial statements that might need to be
adapted to explain how the entity impacts or is impacted by climate change and be
impacted by the effects of the COVID-19 pandemic
IFRS in Focus Accounting considerations related to
the Coronavirus 2019 Disease
Discusses certain key IFRS accounting considerations related to conditions that may
result from the COVID‑19 pandemic The significance of the individual issues
discussed will vary by industry and by entity but the topics discussed are the most
pervasive and difficult to address
IFRS in Focus COVID-19 and financial reporting
under IFRS Standards
Addressed to high level executives and audit committees and takes a strategic look at
what are likely to be the most common hot topics for the upcoming financial reports
whether annual or interim The publication explains why those topics are trending
and what might be some of the related tension points
IFRS in Focus Expected credit loss accounting
considerations related to Coronavirus Disease
2019
Discusses certain key IFRS accounting considerations related to the accounting for
expected credit losses (ECL) that may result from the COVID-19 pandemic The focus
of this publication is for lenders and banks though much of it will be applicable to the
measurement of ECL in industries other than financial services
IFRS in Focus IASB finalises amendment to IFRS 16
Leases regarding COVID-19-related rent
concessions
Addresses the amendment to IFRS 16 Leases published by the IASB in May 2020
titled Covid-19-Related Rent Concessions
Impairment A diagnosis - The impact of a
pandemic on your AASB 136 assessment
Discusses the wide-ranging financial and operational impacts of COVID-19 on an
organisation and as a result the potentially pervasive effect on the financial
statements either through adjustments to fair value of assets such as investment
property and agriculture assets or through impairment testing of goodwill property
plant and equipment right-of-use assets intangible assets and other investments
Other Deloitte resources
IAS Plus COVID-19 page Includes news items and resources in connection with COVID-19 developments that
highlight some of the key accounting and disclosure issues to be considered by
entities that may arise as a result of COVID-19 in preparing financial statements
IAS Plus COVID-19 video series A series of webcasts discussing certain key accounting considerations related to
conditions that may result from the COVID-19 pandemic
Combating COVID-19 with resilience A collection of Deloitte insights to help businesses manage and mitigate the risk
associated with COVID-19
AASB and AUASB
AASB Coronavirus (COVID-19) guidance Links to relevant publications and other resources to support entities prepare their
financial reports during and as a result of the COVID-19 outbreak
AASB-AUASB publication The impact of
coronavirus on financial reporting and the
auditorrsquos considerations
Describes the key considerations and impacts on financial reporting and auditing
arising from the Coronavirus (COVID-19) pandemic
AASB-AUASB publication The impact of COVID-
19 on going concern and other related
assessments
Provides an overview of directorsrsquo and managementrsquos duties in relation to
assessments of solvency and going concern how these concepts interact and how
these may be impacted by COVID-19 and their responsibilities to assess whether the
going concern basis of preparation is appropriate and how this impacts the
preparation of and the disclosures in their financial statements
Tier 1 model financial statements | Whatrsquos new in financial reporting
xii
Resource Details
AASB Staff FAQs ndash Accounting for Government
Support
Reminds entities of the various Standards that may be applicable to for-profit and
not-for-profit entities in accounting for government support provided by
governments to stimulate the economy and to support those entities that have been
significantly affected by the economic impacts of the Coronavirus
AASB Staff FAQs ndash Impairment of Non-Financial
Assets
Provides FAQs which reminds entities of the guidance available in the accounting
standards when testing a non-financial asset for impairment in light of the economic
uncertainties arising from the COVID-19 pandemic
AASB Staff FAQs ndash Events after the reporting
period during the COVID-19 pandemic
Provides a reminder of how events after the reporting period affect financial
statements not yet authorised for issue and discusses the requirements of
accounting standards for assessing such events (The AUASB has also issued an FAQ
for auditors on the same topic)
IASB
IFRS 9 and COVID-19 Accounting for expected credit losses applying IFRS 9 Financial Instruments in the light
of current uncertainty resulting from the COVID-19 pandemic
Applying IFRS Standards in 2020mdash impact of
COVID-19
Provides an overview of some financial reporting considerations for preparers
auditors investors and regulators as they tackle the complexities associated with
covid-19 induced disruptions
ASIC
ASIC COVID-19 implications for financial
reporting and audit
A series of occasionally updated frequently asked questions about financial reporting
and audit matters relating to the impact of the COVID-19 pandemic Discusses key
issues in relation to financial reports and directorsrsquo reports solvency statements
other audit-related matters and changes in ASIC activities
ASIC new and updated regulatory publications
since 1 March 2020
A weekly tracker of ASIC regulatory document updates It lists and includes links to all
new and updated regulatory guides information sheets reports and consultation
papers issued by ASIC in light of the COVID-19 pandemic Also includes links to
legislative instruments (including rules determinations and waivers) made by ASIC
This resource allows for the easy monitoring of new developments and
announcements
ASIC COVID-19 regulatory information Provides ASIC regulatory information and priorities about various classes of entities
public companies market participants insurers responsible entities and financial
advisers and advice licensees in light of the COVID-19 pandemic
ASX
ASX ListedASX Compliance Updates Provides regular updates on ASX market developments including proposed changes
to ASX Listing Rules and Guidance Notes and to provide guidance on topical or
emerging compliance issues (including COVID-19) The ASX usually announces
responses to COVID-19 (such as reporting waivers) through these updates
ASX action on COVID-19 Live updates on COVID-19 developments related to the ASX
Tier 1 model financial statements | Whatrsquos new in financial reporting
xiii
33 Australian specific considerations Some of the Australian-specific and other related factors that need to be considered in the current reporting season
331 Accounting implications of Australian responses to the COVID-19 crisis
JobKeeper
The Federal Governmentrsquos JobKeeper scheme effectively provides a wage subsidy to entities materially impacted by COVID-19
JobKeeper may have a material impact on many entities There are several accounting issues such as whether the employer is
acting as principal or agent and how and when any amounts should be recognised
In our view the employer is acting as principal and the JobKeeper payment represents a government grant (for for-profit entities)
which is recognised under AASB 120 Accounting for Government Grants and Disclosure of Government Assistance This grant is
recognised as a receivable when there is reasonable assurance that the entity will comply with the conditions attached to the grant
and the grant will be received The grant is recognised in profit or loss in the period in which the entity recognises the related costs
as expenses
Where the employee cost is recognised as an expense for-profit entities have an accounting policy choice of presenting the grant
income as other income or alternatively deducting the grant from the related expense Where material the accounting policy for
these grants should be clearly disclosed together with the nature and extent of such grants Separate disclosure is particularly
important where the grant has been deducted from the related expense
Payments made to employees are subject to PAYG withholding and potentially other imposts such as superannuation workersrsquo
compensation levies and payroll tax (depending on the State or Territory) Additionally the employee cost is deductible under
normal tax rules whereas the grant received is assessable when derived (which will include consideration of whether the taxpayer
has a cash or accruals basis of recognition of income) This may give rise to a deferred tax liability where income is recorded for
accounting purposes but not yet assessable for tax purposes1
Consideration should also be given to the entityrsquos accounting policy for previous government grants consistency in treatment
between grants and transparency of the amount received when making the required disclosures both in the financial statements
as well as the operating and financial review This will include how the amounts are presented in the profit or loss and cash flow
statement as well as flow on impacts on areas such as segment reporting impairment and non-IFRS measures
Not-for-profit entities applying AASB 1058 Income of Not-for-Profit Entities are required to recognise the grant in income and do not
have the accounting policy choice to deduct the grant from the related expense
Temporary tax loss carry backs
The Federal Budget delivered in October 2020 announced that corporate tax entities with an aggregated annual turnover of less
than $5 billion can elect to carry back tax losses from the 2019-20 2020-21 and 2021-22 income years to offset previously taxed
profits in 2018-19 or later income years This allows entities to access the benefit of tax losses earlier and receive a refund of tax
previously paid The loss offset can be claimed in the 2020-21 and 2020-22 years The amount carried back must not generate a
franking deficit and is limited to the level of previously taxed profits
Accounting considerations include
bull Recognition of a current tax asset ndash AASB 112 Income Taxes requires the benefit relating to a tax loss that can be carried back
to recover current tax of a previous period to be recognised as an asset As the carry back is optional only entities that expect
to elect to carry back will be able to recognise a current tax asset
bull Classification ndash Any tax asset recognised would be classified based on its expected receipt As the intention is that refunds of
past tax would be paid on lodgement of the entityrsquos tax return the amount would generally be classified as a current asset
1 During June 2020 the ATO updated their JobKeeper site to clarify when the JobKeeper payment is considered derived for taxation purposes For
entities using an accruals basis payments are derived when the entity has a legal entitlement to those payments (it is the ATOrsquos receipt of the
business monthly declaration that triggers an entityrsquos entitlement to JobKeeper and payment of that entitlement) An entity which operates on a
cash accounting basis the payments for a JobKeeper fortnight are derived when the entity receives those payments Accordingly JobKeeper
amounts paid to employees during the last month of an entityrsquos income year will be deductible in that period whereas the JobKeeper claim may not
be derived until the subsequent income year This will give rise to a deferred tax liability on the accrued receivable
Tier 1 model financial statements | Whatrsquos new in financial reporting
xiv
bull Deferred taxes ndash The assessment of the recoverability of deferred tax assets may change as a result of the ability to carry back
tax losses
bull Uncertain tax positions ndash As the carry back is limited to the level of previously taxed profits uncertain tax positions in relation
to prior income years may directly or indirectly impact the amount of tax losses that can be recognised as an asset In our
view the amount recognised for a carry back should be consistent with the recognition and measurement of current tax
amounts in prior years This is consistent with the requirements of Interpretation 23 Uncertainty over Income Tax Treatments
The legislation to enact this measure passed both Houses of Parliament on Friday 9 October 2020 and so is substantively enacted
Accordingly the current and deferred tax implications of these changes must be recognised where the entityrsquos reporting date is
after substantive enactment eg including in financial reports for 31 December 2020
Immediate deduction for capital expenditure
Also announced in the October 2020 Federal Budget was a concession whereby businesses with aggregated annual turnover of
less than $5 billion can deduct the full cost of eligible capital assets acquired after 730pm AEDT on 6 October 2020 and first used
or installed ready for use by 30 June 2022 The key concession is available for the full cost of new eligible depreciating assets and
the cost of improvements made during the period to existing eligible depreciable assets Under this Budget announcement only
businesses with aggregated annual turnover less than $50 million can deduct the cost of second-hand eligible depreciating assets
Accounting considerations include
bull Deferred tax considerations ndash An immediate deduction will give rise to a deferred tax liability for the taxable temporary
difference between the carrying amount of the asset and the tax base (which will generally be zero)
bull Interaction with the tax loss carry back provisions ndash The immediate tax deduction (similar to other deductions) may result in a
tax loss which may be eligible for carry back resulting in a refund of past tax paid (as discussed above) Accordingly any
amount of the tax loss able to be carried back will be recognised as a current tax asset rather than a deferred tax asset arising
from a tax loss
bull Other impacts ndash The immediate deduction may cause some entities to preference direct acquisition rather than leasing of
business assets which may change capital management approaches and disclosures
This measure was substantively enacted as of Friday 9 October 2020 and accordingly must be taken into account in the
measurement of current and deferred taxes in reporting periods ending on or after this date
Research and development (RampD) concession The October 2020 Federal Budget announced that the existing RampD law will continue to apply until 30 June 2021 Subsequently
the refundable RampD tax offset rate for entities with turnover of less than $20m will be fixed at 185 per cent above the prevailing
corporate tax rate For entities with turnover of $20 million or more the non refundable RampD tax offset will be based on a simpler
two-stepped intensity threshold The RampD expenditure threshold will also be increased from $100 million to $150 million
Consistent with existing practice refundable RampD tax offsets are generally accounted for as government grants and the RampD tax
offset can either be analogised as a government grant or an income tax although the interpretation of accounting standards varies
amongst accounting professionals It is important that accounting for the RampD tax offsets is clear and transparent
This measure was substantively enacted as of Friday 9 October 2020 and accordingly must be taken into account in the
measurement of current and deferred taxes in reporting periods ending on or after this date
See our Clarity publication for more information on accounting for the RampD concession
JobMaker Plan The October 2020 Federal Budget announced a JobMaker Hiring Credit (or payment) will be introduced for certain employers
creating additional jobs in a 12 month period ending 6 October 2021 for eligible employees who are aged between 16 and 35
Eligible employers must be able to demonstrate that the new employee will increase overall headcount and payroll in order to
claim the JobMaker Hiring Credit
Additionally a Boosting Apprenticeship Commencements wage subsidy will be available to employers employing an eligible
Australian apprentice or trainee who commences on or after 5 October 2020 The subsidy will provide 50 of the wages paid to
Tier 1 model financial statements | Whatrsquos new in financial reporting
xv
eligible employees between 5 October 2020 and 30 September 2021 up to a maximum of $7000 per quarter per eligible
apprentice or trainee
Consistent with our view on how the existing JobKeeper scheme is accounted for (see above) we believe the employer is acting as
principal and the Hiring Credit and Boosting Apprenticeship Commencement wage subsidy represents a government grant (for
for-profit entities) which is recognised under AASB 120 Accounting for Government Grants and Disclosure of Government Assistance
Grants are recognised as a receivable when there is reasonable assurance that the entity will comply with the conditions attached
to the grant and the grant will be received ndash this will depend upon meeting the eligibility criteria for each scheme The grant is
recognised in profit or loss in the period in which the entity recognises the related costs as expenses and will either be classified as
other income or offset against the relevant expense
At the date of the publication legislation to permit the implementation of the JobMaker Hiring Credit has been passed by
parliament and the associated JobMaker Hiring Credit rules were subject to consultation by Treasury
Other government schemes
There is a vast array of government packages available from all levels of government to assist entities to manage cash flow
challenges Characterisation of these schemes between government assistance or government grants under AASB 120 or income
tax under AASB 112 directly impacts the accounting For instance AASB 120 indicates that the provision of a guarantee is
government assistance rather than a grant (so only requiring disclosure) however government support and loan packages
involving other features may have government grant elements that require separate accounting
332 Tax legislation expands entities required to prepare GPFS Section 3CA of the Tax Administration Act requires certain country by country reporting entities (CBC reporting entities) to lodge
GPFS with the ATO where the entity has not lodged GPFS with ASIC In broad terms CBC reporting entities are single entities or
members of an accounting group that has annual global income of more than A$1 billion2
This measure originally applied to lsquosignificant global entitiesrsquo (SGEs) for income years commencing on or after 1 July 2016 However
in May 2020 Federal Parliament passed amendments to the original requirements which
bull Transfer the requirement to prepare GPFS arising under s3CA of the Tax Administration Act from SGEs to CBC reporting
entities
bull Require entities to ignore accounting exemptions from consolidation when testing whether the annual global income meets or
exceeds the A$1 billion threshold to be a SGE or CBC reporting entity (there are differences between how these are treated
for the SGE and CBC reporting entity definitions)
bull Require entities to determine annual global income (and so whether the entity is a SGE or CBC reporting entity) for a lsquonotional
listed company grouprsquo (NLCG) in some cases This has the effect of ensuring that annual global income is determined on a
consolidated basis even though that amount may not be disclosed in the financial statements of the ultimate parent entity
(because financial statements are not prepared or are only prepared on a stand alone basis)3
The amendments apply to income years or periods beginning on after 1 July 2019
The CBC reporting entity definition captures all entities previously considered SGEs but broadens the definition to include lsquonotional
listed company groupsrsquo and to make it clear it captures entities that are not consolidated due to being immaterial in the
consolidated financial statements
2 lsquoAnnual global incomersquo is included in the tax legislation definitions Essentially annual global income includes revenue and other income See the
Australian financial reporting guide (available at wwwdeloittecomaumodels) for more information 3 A NLCG is a group of entities that would be required to be consolidated as a single group under applicable accounting rules if any member of the
group (such as the parent entity) was a listed company Listed companies are required to prepare consolidated financial statements and so the
lack of a legal requirement to prepare consolidated financial statements is ignored Preparation of financial statements is not required but annual
global income must be determined as if it were disclosed in those consolidated financial statements This concept is used to determine whether
the members of a group are CBC reporting entities Individual entities within the group may then be required to prepare GPFS (where they are a
corporate tax entity preparing a tax return) in which case GPFS must be prepared for the entity or a parent
Tier 1 model financial statements | Whatrsquos new in financial reporting
xvi
In other words all entities previously identified as SGEs meet the new CBC reporting entity definition This is because the annual
global income will continue to be determined for the same (or more) entities as under the previous SGE definition As a result
these entities will continue to be subject to the GPFS requirements as a CBC reporting entity In addition additional entities may
fall into the CBC reporting group and so may also now have a GPFS requirement
Accordingly in broad terms the following categories of entities will be newly required to prepare GPFS for income years or periods
commencing on or after 1 July 2019 where the annual global income in the relevant lsquoCBC reporting grouprsquo exceeds the A$1 billion
threshold
bull Entities that are or are ultimately controlled by entities that have no other requirement to prepare financial statements or
were only required to prepare stand alone financial statements This may apply to groups headed by trusts partnerships co-
operatives and similar entities
bull Entities controlled by foreign entities where that foreign entity has no obligation to prepare financial statements (or prepares
stand alone financial statements) in the foreign jurisdiction
bull Branches of foreign entities operating permanent establishments in Australia that do not have an obligation to prepare
financial statements in their home jurisdiction
bull Australian corporate groups where consolidated financial statements were not previously prepared eg unlisted corporate
entities that are not lsquoreporting entitiesrsquo preparing stand-alone special purpose financial statements (ie without consolidating
subsidiaries)
In some cases these entities may have already considered themselves to be SGEs under previous legislation and may have already
prepared GPFS These entities now have their obligations clarified through the amendments and will continue to be required to
prepare GPFS but as CBC reporting entities Other entities may have adopted a technical reading of the previous legislation and
not been SGEs but will now be subject to the GPFS requirements where they are CBC reporting entities
More information about changes to the GPFS requirements can be found in our Clarity publication
which explains the changes in more detail This publication is available at
wwwdeloittecomauclarity
More information about the GPFS requirements can be found in the Australian financial reporting
guide available at wwwdeloittecomaumodels
333 Changes to proprietary company thresholds The Corporations Act classifies a proprietary company as either a large proprietary company or a small proprietary company by
reference to a test based on the amounts of consolidated revenue consolidated gross assets and employees of the entity The
Corporations Amendment (Proprietary Company Thresholds) Regulations 2019 made in April 2019 operate to amend the thresholds
with effect from 1 July 2019 The application of these amendments is stated as applying in relation to the 2019-20 financial year
and later financial years
Accordingly the amended thresholds apply to financial years beginning on or after 1 July 2019 An entity is classified as a
large proprietary company or small proprietary company for a financial year if it satisfies at least two of the conditions noted for
Large or Small below respectively
Condition Value ndash Large Value - Small
Consolidated revenue for the financial year of the company and the
entities it controls (if any)
$50 million or more Less than $50 million
Value of the consolidated gross assets at the end of the financial
year of the company and the entities it controls
$25 million or more Less than $25 million
Number of employees of the company and the entities it controls at
the end of the financial year
100 or more Less than 100
Tier 1 model financial statements | Whatrsquos new in financial reporting
xvii
334 ASX developments
ASX Listing Rule and Guidance Note amendments In mid-October 2019 the ASX released updates to its ASX Listing Rules and associated guidance
The ASXs announcement of the changes (available at wwwasxcomau) notes the following key changes
bull More guidance and direction on the information that should be given to shareholders in notices of meetings
bull More guidance and direction on the voting processes that should be followed at shareholder meetings and more consistent
reporting of voting outcomes
bull Simpler and clearer processes and forms to announce a proposed issue of shares and to seek their quotation
bull Changes to ASXrsquos quarterly reporting regime to provide a more robust disclosure framework for start-up entities
bull Better and timelier disclosure by listed investment companies and listed investment trusts of their net tangible assets (NTA)
backing
bull New measures to address breaches of the listing rules
In addition new and revised requirements around admission and educational requirements for people communicating with the
ASX have been introduced
The updated requirements came into effect on 1 December 2019 with the following exceptions
bull The new educational requirements will apply from 1 July 2020 (the ASX subsequently decided to defer the introduction of
these requirements for one year so that they will come into effect on 1 July 2021 rather than 1 July 2020)
bull The changes to the Appendix 4C and Appendix 5B quarterly cash flow reports required for certain entities came into effect for
the quarter beginning 1 January 2020 and ending 31 March 2020
For more information see the Australian financial reporting guide available at wwwdeloittecomaumodels
Updated ASX Corporate Governance Principles and Recommendations The ASX Corporate Governance Council issued the fourth edition of the lsquoCorporate Governance Principles and Recommendationsrsquo
in February 2019 The fourth edition is effective for a listed entityrsquos first full financial year commencing on or after 1 January 2020
For December reporting entities the fourth edition would be applied to financial years ending on or after 31 December 2020
A summary of the key changes in Corporate Governance Principles and Recommendations can be found in Appendix 2 starting on
page 282
ASX Guidance Notes updates The ASX has released the following updated ASX Guidance Notes
bull GN 3 Co-operatives and Mutuals Listing on ASX
bull GN 4 Foreign Entities Listing on ASX
bull GN 12 Significant Changes to Activities
bull GN 19 Performance Shares
Details of the amendments are outlined in this ASX document
Tier 1 model financial statements | Whatrsquos new in financial reporting
xviii
Updated ASX Listing Rule appendices The ASX has released updated the following ASX Listing Rule appendices
Updated appendix Date reissued Summary of changes
ASX Appendix 4C Quarterly cash flow
report for entities subject to Listing Rule
47B
July 2020 Changes primarily relate to the materials in section 8 of the report
relating to estimated cash available for future operating activities
which the ASX has determined a number of entities have not been
completing correctly
ASX Appendix 4G Key to Disclosures
Corporate Governance Council Principles
and Recommendations
July 2020 Correcting an error in the fourth edition version of the Appendix 4G
ASX Appendix 5B Mining exploration
entity or oil and gas exploration entity
quarterly cash flow report
July 2020 Changes primarily relate to the materials in section 8 of the report
relating to estimated cash available for future operating activities
which the ASX has determined a number of entities have not been
completing correctly
335 Auditor remuneration disclosure In November 2020 the Federal Parliamentary Joint Committee on Corporations and Financial Services released Regulation of
Auditing in Australia Final Report (available at parlinfoaphgovau) Included in this final report is a recommendation to establish
defined categories and associated fee disclosure requirements in relation to audit and non-audit services This recommendation
was directed primarily at the Financial Reporting Council (FRC) and the AASB has a project on audit fee disclosure in progress
We continue to encourage entities to provide transparent and expanded disclosures in their financial reports at 31 December
2020 Suggested categories include
bull Fees to the group auditor for the audit or review of the statutory financial reports of the Group subsidiaries and joint
operations
bull Fees for statutory assurance services that are required by legislation to be provided by the auditor (eg certain reporting to
APRA Queensland Building and Construction Commission reports AFSL Form FS 71)
bull Fees for other assurance and agreed-upon procedures under other legislation or contractual arrangements (eg assurance on
revenue information under a royalty agreement comfort letters or agreed-upon procedures on other reports) when there is
discretion as to whether the service is provided by the auditor or another firm
bull Fees for other services (eg tax compliance)
Illustrative example
An illustrative example of the layout of the auditor remuneration note following the above guidelines can be found in
Appendix 2 in Note 67 (see page 271)
Tier 1 model financial statements | Whatrsquos new in financial reporting
xix
34 Other developments 341 Climate-related and other emerging risks financial disclosures In September 2018 ASIC released a media release 18-273MR ASIC reports on climate risk disclosure by Australiarsquos listed companies
ASIC noted that of the 60 listed companies in its ASX 300 sample 17 identified climate risk as a material risk to their business
AISC also noted that while most of the reviewed ASX 100 entities had considered climate risk to the companyrsquos business to at least
some extent disclosure practices were considerably fragmented with information provided to the market in differing forms across
a wide range of means of disclosure In some cases the review found climate risk disclosures to be far too general and of limited
use to investors The full text of the media release can be found at wwwasicgovau
Furthermore the AASB and Auditing and Assurance Standards Board (AuASB) together released a bulletin on Climate-related and
other emerging risks disclosures assessing financial statement materiality using AASB Practice Statement 2 (APS 2) which guides
directors preparers and auditors when preparing and auditing financial statements for their half and full year ends In early May
2019 the AASB and AuASB released an updated version of the bulletin (dated April 2019) The full text of the AASBAuASB bulletin
can be found at wwwauasbgovau
In addition during 2020 several developments have occurred including
bull The World Economic Forum (WEF) has issued a publication Measuring Stakeholder Capitalism Towards Common Metrics and
Consistent Reporting of Sustainable Value Creation which discusses the new environmental social and governance (ESG)
disclosure framework developed by the Big Four accounting firms (report press release)
bull Five internationally significant framework- and standard-setting institutions (CDP CDSB GRI IIRC and SASB) have published a
statement of intent to work together towards a comprehensive corporate reporting system (press release statement of
intent)
bull The International Federation of Accountants (IFAC) released Enhancing Corporate Reporting The Way Forward calling for the
creation of a new sustainability standards board that would exist alongside the IASB under the IFRS Foundation (access to
report)
bull The IFRS Foundation Trustees have released a Consultation Paper on Sustainability Reporting in which it outlines how the IFRSF
might establish a Sustainability Standards Board (SSB) and provide for its governance and oversight under the IFRSFrsquos existing
arrangements (IFRS in Focus Consultation Paper press release Deloitte statement)
These model financial statements highlight those disclosures that may be impacted by climate
change throughout the main body of the financial statements Appendix 1 summarises the
disclosures that may be impacted by climate change
More information about climate-related and other emerging risks disclosures can be found in our
Clarity publication which is available at wwwdeloittecomauclarity and information about the
broader impacts on financial reporting can be found in the Australian financial reporting guide
available at wwwdeloittecomaumodels
The coronavirus pandemic and its broad economic and societal disruption have not reduced calls for
improved and comprehensive corporate reporting There has been an increase in investor demand
for sustainability disclosures and climate related risk disclosures In order to track and analyse
important developments in this crucial area we have launched a new global publication series
Purpose-driven Business Reporting in Focus
Tier 1 model financial statements | Whatrsquos new in financial reporting
xx
35 Details of new and revised financial reporting pronouncements 351 Introduction The tables and other information in this section outline the new and revised pronouncements and other requirements that are to
be applied for the first time at 31 December 2020 or which may be early adopted at that date For each pronouncement the
effective date is listed together with a summary of its applicability to annual reports and half-year reports for periods ending on
31 December 2020
This section is set out as follows
Section What is included
352 Summary of mandatory new and
amended pronouncements
An overview table of all new accounting pronouncements that are mandatory for
31 December 2020
353 Overall considerations A summary of the impacts of adopting new and revised pronouncements and
disclosing information about pronouncements not yet adopted
354 New and revised Standards New or revised Standards which apply either to for-profit entities or that apply to
both for-profit and not-for-profit entities
355 New and revised Interpretations - New and revised Interpretations which apply either to for-profit entities or that
apply to both for-profit and not-for-profit entities
356 New and revised pronouncements
applicable to not-for-profit entities only -
New and revised pronouncements which apply only to not-for-profit entities
357 Other new pronouncements issued
by the AASB -
Other new pronouncements made by the AASB which are relevant in financial
reporting
358 Pronouncements issued by the IASB
or IFRS Interpretations Committee where
an equivalent pronouncement has not
been issued by the AASB -
Pronouncements made by the IASB or IFRS Interpretations Committee where an
equivalent pronouncement has not been made by the AASB but is expected to be
issued in due course
359 IFRS Interpretations Committee
agenda decisions
A summary of recent IFRS Interpretations Committee agenda decisions which
should be considered a source of guidance when selecting suitable accounting
policies
3510 AASB agenda decisions A summary of recent issues raised for consideration by the AASB which are either
not added to the agenda or else removed from the agenda
3511 Corporations Act 2001
developments
Corporations Act and Corporations Regulations developments relevant to financial
reporting
3512 ASIC A summary of recent developments from ASIC that are relevant to financial reporting
3513 ASX A summary of recent developments from the ASX that are relevant to financial
reporting
Tier 1 model financial statements | Whatrsquos new in financial reporting
xxi
352 Summary of mandatory new and amended pronouncements The table below summarises the amended reporting requirements that must be applied for the first time for financial years ending
31 December 2020 and half-years ending 31 December 2020 (see later in this section for a summary of each pronouncement)
Date issued Pronouncement Effective for annual
reporting periods
beginning on or after
Applicable to all annual financial statements4
December 2018 AASB 2018-6 Amendments to Australian Accounting Standards ndash Definition of a
Business
1 January 20205
December 2019 AASB 2018-7 Amendments to Australian Accounting Standards ndash Definition of Material 1 January 2020
May 2019 Conceptual Framework for Financial Reporting and AASB 2019-1 Amendments to
Australian Accounting Standards ndash References to the Conceptual Framework
1 January 20206
October 2019 AASB 2019-3 Amendments to Australian Accounting Standards ndash Interest Rate
Benchmark Reform
1 January 2020
December 2019 AASB 2019-5 Amendments to Australian Accounting Standards ndash Disclosure of the Effect
of New IFRS Standards Not Yet Issued in Australia
1 January 2020
Applicable to half-year financial statements
June 2020 AASB 2020-4 Amendments to Australian Accounting Standards ndash Covid-19 Related Rent
Concessions
1 June 20204
Applicable only to not-for-profit entities7
October 2018
September 2019
AASB 1059 Service Concession Arrangements Grantors AASB 2018-5 Amendments to
Australian Accounting Standards ndash Deferral of AASB 1059 and AASB 2019-2
Amendments to Australian Accounting Standards ndash Implementation of AASB 1059
1 January 2020
November 2019 AASB 2019-4 Amendments to Australian Accounting Standards ndash Disclosure in Special
Purpose Financial Statements of Not-for-Profit Private Sector Entities on Compliance with
Recognition and Measurement Requirements
(ending) 30 June 20208
December 2019 AASB 2019-7 Amendments to Australian Accounting Standards ndash Disclosure of GPS
Measures of Key Fiscal Aggregates and GAAPGFS Reconciliations
1 January 2020
4 Although not applicable to annual financial statements at 31 December 2020 AASB 2020-4 Amendments to Australian Accounting Standards ndash Covid-
19 Related Rent Concessions applies to reporting periods beginning on or after 1 June 2020 Accordingly whilst not applicable in annual financial
statements it is applicable in half-year financial statements at this date and may wish to be early adopted in annual financial statements ending
31 December 2020 Illustrative disclosures on early adoption are provided in Appendix 2 on page 248 5 Applies to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or
after 1 January 2020 and to asset acquisitions that occur on or after the beginning of that period 6 The amendments made by AASB 2019-1 apply to for-profit private sector entities that have public accountability and are required by legislation to
comply with Australian Accounting Standards and other for-profit entities that elect to apply the Conceptual Framework 7 The pronouncements in this section are mandatory for the first time for not-for-profit entities and are either not applicable to for-profit entities
or have been applied by for-profit entities in previous periods 8 AASB 2019-4 applies to annual reporting periods ending on or after 30 June 2020 with earlier application permitted Accordingly this
pronouncement is applicable to affected not-for-profit entities with financial years ending on 31 December 2020
Tier 1 model financial statements | Whatrsquos new in financial reporting
xxii
353 Overall considerations
Impacts of adopting new and revised pronouncements Applying new and revised pronouncements for the first time can result in direct changes in recognition measurement
presentation and disclosure requirements In addition there can be consequential impacts on financial reports through the
transitional provisions of the pronouncement and the existing requirements of other Accounting Standards
The table below outlines some of the areas where these consequential impacts should be considered
Area Consideration
Updates to accounting
policies
The terminology and substance of accounting policies may need to be updated to reflect new recognition
measurement and other requirements
Impact of transitional
provisions
AASB 108 Accounting Policies Changes in Accounting Estimates and Errors contains a general requirement that
changes in accounting policies are retrospectively applied but this does not apply to the extent an individual
pronouncement has specific transitional provisions
Disclosures about changes
in accounting policies
Where an entity changes its accounting policy as a result of the initial application of an Accounting Standard
(including Interpretations as a result of AASB 1048 Interpretation of Standards) and it has an effect on the
current period or any prior period AASB 108 (subject to any specific transitional provisions of the Accounting
Standard) requires the disclosure of a number of matters eg the title of the Standard the nature of the
change in accounting policy a description of the transitional provisions and the amount of the adjustment
for each financial statement line item affected
Third statement of financial
position
AASB 101 Presentation of Financial Statements requires (subject to any specific transitional provisions of the
relevant Accounting Standard) the presentation of a third statement of financial position as at the beginning
of the preceding period in addition to the minimum comparative financial statements in a number of
situations This applies where an entity applies an accounting policy retrospectively and the retrospective
application has a material effect on the information in the statement of financial position at the beginning of
the preceding period
Earnings per share (EPS) Where applicable to the entity AASB 133 Earnings Per Share requires basic and diluted EPS to be adjusted for
the impacts of adjustments resulting from changes in accounting policies accounted for retrospectively and
AASB 108 requires the disclosure of the amount of any such adjustments
Disclosing information about pronouncements not yet adopted
The disclosure requirements required in relation to new and revised accounting pronouncements need to be carefully considered
where they have not yet been adopted
AASB 108 Accounting Policies Changes in Accounting Estimates and Errors requires an entity to disclose any known or reasonably
estimable information about the possible impact that the application of Accounting Standards on issue which have not been
applied including a discussion of the impact that initial application will have on the entityrsquos financial statements
ASIC together with other global regulators has previously strongly emphasised the need for publicly accountable entities to fully
comply with these requirements in light of significant changes in accounting pronouncements
Entities need to ensure that they comply with the requirements of AASB 108 and respond to regulatory expectations
Australian-specific Illustrative examples of the disclosures can be found in Appendix 2 in Note 2
(starting on page 253)
Early adoption
Where early adoption is being contemplated it is important to address any necessary procedural requirements eg for entities
reporting under the Corporations Act 2001 appropriate directorsrsquo resolutions for early adoption must be made under s334 (5)
Tier 1 model financial statements | Whatrsquos new in financial reporting
xxiii
354 New and revised Standards The table below outlines new and revised Standards which apply either to for-profit entities or that apply to both for-profit and
not-for-profit entities
New or revised requirement When effective Applicability at
31 December
2020
AASB 17 Insurance Contracts and AASB 2020-5 Amendments to Australian Accounting
Standards ndash Insurance Contracts
AASB 17 measures insurance contracts either under the general model or a simplified version of
this called the lsquopremium allocation approachrsquo The general model is defined such that at initial
recognition an entity measures a group of contracts at the total of (a) the amount of fulfilment
cash flows which comprise probability-weighted estimates of future cash flows an adjustment to
reflect the time value of money and the financial risks associated with those future cash flows
and a risk adjustment for non-financial risk and (b) the contractual service margin
On subsequent measurement the carrying amount of a group of insurance contracts at the end
of each reporting period is the sum of the liability for remaining coverage and the liability for
incurred claims The liability for remaining coverage comprises the fulfilment cash flows related
to future services and the contractual service margin of the group at that date The liability for
incurred claims is measured as the fulfilment cash flows related to past services allocated to the
group at that date
An entity may simplify the measurement of the liability for remaining coverage of a group of
insurance contracts using the premium allocation approach on the condition that at initial
recognition the entity reasonably expects that doing so would produce a reasonable
approximation of the general model or the coverage period of each contract in the group is one
year or less
AASB 2020-5 reduce the costs of applying AASB 17 by simplifying some requirements make an
entityrsquos financial performance relating to insurance contracts earlier to explain and eases the
transition to AASB 17 It also includes amendments to AASB 4 Insurance Contracts to permit
eligible insurers to continue to apply AASB 139 Financial Instruments Recognition and
Measurement until they are required to apply AASB 9 Financial Instruments alongside AASB 17
Note AASB 17 was originally effective for annual reporting periods beginning on or after 1 January
2021 but was deferred to annual reporting periods beginning on or after 1 January 2023 by
AASB 2020-5 Although AASB 2020-5 is effective for annual periods beginning on or after 1 January
2021 its amendments have the effect of deferring the effective date of AASB 17 to annual reporting
periods beginning on or after 1 January 2023 (in addition to amending AASB 17 and AASB 4)
More information IFRS in Focus newsletter (summary of original Standard) IFRS in Focus
newsletter (amendments) summary of IFRS 17
Annual reporting
periods beginning
on or after
1 January 2023
(see note in
previous column)
Optional
Tier 1 model financial statements | Whatrsquos new in financial reporting
xxiv
New or revised requirement When effective Applicability at
31 December
2020
AASB 1060 General Purpose Financial Statements ndash Simplified Disclosures for For-Profit and
Not-for-Profit Tier 2 Entities
A separate disclosure Standard applied in the preparation of general purpose financial
statements prepared in accordance with lsquoTier 2rsquo of the differential reporting framework in
AASB 1053 Application of Tiers of Australian Accounting Standards
Entities preparing general purpose financial statements in accordance with this Standard are not
required to comply with the disclosure requirements of other Accounting Standards However
the recognition and measurement requirements of all Accounting Standards must be applied
The disclosure requirements in AASB 1060 replace those required under lsquoReduced Disclosure
Requirementsrsquo (RDR) which shaded those disclosure requirements of Accounting Standards that
were not applicable to Tier 2 entities The number of disclosures required by this Standard are
generally less than RDR Note This standard does not apply to Tier 1 entities
Annual reporting
periods beginning
on or after
1 July 2021
Optional
(where applicable to
the entity)
AASB 2014-10 Amendments to Australian Accounting Standards ndash Sale or Contribution of
Assets between an Investor and its Associate or Joint Venture AASB 2015-10 Amendments
to Australian Accounting Standards ndash Effective Date of Amendments to AASB 10 and AASB
128 AASB 2017-5 Amendments to Australian Accounting Standards ndash Effective Date of
Amendments to AASB 10 and AASB 128 and Editorial Corrections
Addresses a conflict between the requirements of AASB 128 Investments in Associates and Joint
Ventures and AASB 10 Consolidated Financial Statements and clarifies that in a transaction
involving an associate or joint venture the extent of gain or loss recognised depends on whether
the assets sold or contributed constitute a business
Note The equivalent amendments to IFRS 10 and IAS 28 have no set commencement date due to
amendments made by the IASB pending further research in other projects AASB 2015-10 extended
the application date of the equivalent amendments to 1 January 2018 AASB 2017-5 then further
extended the application date of the amendments from 1 January 2018 to 1 January 2022 and also
made a number of editorial amendments to other standards which are effective for annual periods
beginning on or after 1 January 2018
More information IFRS in Focus newsletter
Annual reporting
periods beginning
on or after
1 January 2022
(see note in
previous column)
Optional
(editorial
amendments made
by AASB 2017-5 were
mandatory from 1
January 2018)
AASB 2018-6 Amendments to Australian Accounting Standards ndash Definition of a Business
Amends AASB 3 Business Combinations to clarify the definition of a business with the objective of
assisting entities to determine whether a transaction should be accounted for as a business
combination or as an asset acquisition
The amendments
bull Clarify that to be considered a business an acquired set of activities and assets must
include at a minimum an input and a substantive process that together significantly
contribute to the ability to create outputs
bull Remove the assessment of whether market participants are capable of replacing any
missing inputs or processes and continuing to produce outputs
bull Add guidance and illustrative examples to help entities assess whether a substantive
process has been acquired
bull Narrow the definitions of a business and of outputs by focusing on goods and services
provided to customers and by removing the reference to an ability to reduce costs
bull Add an optional concentration test that permits a simplified assessment of whether an
acquired set of activities and assets is not a business
More information IFRS in Focus newsletter
The amendments
are applied
prospectively to all
business
combinations and
asset acquisitions
for which the
acquisition date is
on or after the
beginning of the
first reporting
period beginning
on or after
1 January 2020
Mandatory
Tier 1 model financial statements | Whatrsquos new in financial reporting
xxv
New or revised requirement When effective Applicability at
31 December
2020
AASB 2018-7 Amendments to Australian Accounting Standards ndash Definition of Material
These amendments are intended to address concerns that the wording in the definition of
lsquomaterialrsquo was different in the Conceptual Framework for Financial Reporting AASB 101 Presentation
of Financial Statements and AASB 108 Accounting Policies Changes in Accounting Estimates and
Errors
The amendments address these concerns by
bull Replacing the term lsquocould influencersquo with lsquocould reasonably be expected to influencersquo
bull Including the concept of lsquoobscuring informationrsquo alongside the concepts of lsquoomittingrsquo and
lsquomisstatingrsquo information in the definition of material
bull Clarifying that the users to which the definition refers are the primary users of general
purpose financial statements referred to in the Conceptual Framework
bull Aligning the definition of material across IFRS Standards and other publications
More information IFRS in Focus newsletter
Annual periods
beginning on or
after
1 January 2020
Mandatory
AASB 2019-1 Amendments to Australian Accounting Standards ndash References to the
Conceptual Framework
Makes amendments to various Accounting Standards and other pronouncements to support the
issue of the revised Conceptual Framework for Financial Reporting
Some Accounting Standards and other pronouncements contain references to or quotations
from the previous versions of the Conceptual Framework This Standard updates some of these
references and quotations so they refer to the Conceptual Framework issued by the AASB In June
2019 and also makes other amendments to clarify which version of the Conceptual Framework is
referred to in particular documents
Note The amendments made by AASB 2019-1 apply to for-profit private sector entities that have
public accountability and are required by legislation to comply with Australian Accounting Standards
and other for-profit entities that elect to apply the Conceptual Framework The superseded text
providing references to the previous versions of the Conceptual Framework is reintroduced by the
amendments as a series of lsquoAusCFrsquo paragraphs and footnotes that apply to lsquoAusCF entitiesrsquo being not-
for-profit entities and for-profit entities that are not applying the revised Conceptual Framework
More information IFRS in Focus newsletter
Annual periods
beginning on or
after
1 January 2020
(see note)
Mandatory
AASB 2019-3 Amendments to Australian Accounting Standards ndash Interest Rate Benchmark
Reform
The amendments affect entities that apply the hedge accounting requirements of AASB 9
Financial Instruments or AASB 139 Financial Instruments Recognition and Measurement to hedging
relationships directly affected by the interest rate benchmark reform
The amendments would mandatorily apply to all hedging relationships that are directly affected
by the interest rate benchmark reform and modify specific hedge accounting requirements so
that entities would apply those hedge accounting requirements assuming that the interest rate
benchmark is not altered as a result of the interest rate benchmark reform
More information IFRS in Focus newsletter
Annual periods
beginning on or
after
1 January 2020
Mandatory
Tier 1 model financial statements | Whatrsquos new in financial reporting
xxvi
New or revised requirement When effective Applicability at
31 December
2020
AASB 2019-5 Amendments to Australian Accounting Standards ndash Disclosure of the Effect of
New IFRS Standards Not Yet Issued in Australia
Amends AASB 1054 Australian Additional Disclosures to add a requirement for entities that intend
to be compliant with IFRS standards to disclose the information required by AASB 108 Accounting
Policies Changes in Accounting Estimates and Errors (specifically paragraphs 30 and 31) for the
potential effect of each IFRS pronouncement that has not yet been issued by the AASB
Note The added disclosure requirements only apply to Tier 1 financial reports and permits private
sector for-profit entities to assert compliance with IFRS
Annual periods
beginning on or
after
1 January 2020
Mandatory
AASB 2020-1 Amendments to Australian Accounting Standards ndash Classification of Liabilities
as Current or Non-current and AASB 2020-6 Amendments to Australian Accounting
Standards ndash Classification of Liabilities as Current or Non-current ndash Deferral of Effective
Date
Amends AASB 101 Presentation of Financial Statements to
bull Clarify that the classification of liabilities as current or non-current is based on rights that
are in existence at the end of the reporting period
bull Specify that classification is unaffected by expectations about whether an entity will exercise
its right to defer settlement of a liability
bull Explains that rights are in existence if covenants are complied with at the end of the
reporting period
bull Introduces a definition of lsquosettlementrsquo to make clear that settlement refers to the transfer to
the counterparty of cash equity instruments other assets or services
Note AASB 2020-6 although itself effective for annual reporting periods beginning on or after 1
January 2022 (the original effective date of AASB 2020-1) has the effect of deferring the mandatory
application of those amendments to annual reporting periods beginning on or after 1 January 2023
More information IFRS in Focus newsletter (original amendments) after 1 IFRS in IFRS in Focus
newsletter (deferral)
Annual reporting
periods beginning
on or after
1 January 2023
(see note)
Optional
AASB 2020-2 Amendments to Australian Accounting Standards ndash Removal of Special
Purpose Financial Statements for Certain For-Profit Private Sector Entities
Makes amendments to numerous Standards and the Conceptual Framework for Financial
Reporting so that they apply explicitly to
bull For-profit private sector entities that are required by legislation to prepare financial
statements that comply with either Australian Accounting Standards or accounting
standards
bull Other for-profit private sector entities that are required only by their constituting document
or another document to prepare financial statements that comply with Australian
Accounting Standards provided that the relevant document was created or amended on or
after 1 July 2021
The effect of these requirements is that the above entities are required to prepare general
purpose financial statements and apply the Conceptual Framework for Financial Reporting when
preparing financial statements Accordingly these entities will not be permitted to prepare
special purpose financial statements
Applicable to
annual reporting
periods beginning
on or after
1 July 2021
Optional
Tier 1 model financial statements | Whatrsquos new in financial reporting
xxvii
New or revised requirement When effective Applicability at
31 December
2020
AASB 2020-3 Amendments to Australian Accounting Standards ndash Annual Improvements
2018-2020 and Other Amendments
Makes amendments to the following Standards
bull Annual improvements
‒ AASB 1 First-time Adoption of International Financial Reporting Standards to permit a
subsidiary that applies paragraph D16(a) of AASB 1 to measure cumulative translation
differences using the amounts reported by its parent based on the parentrsquos date of
transition to IFRSs
‒ AASB 9 Financial Instruments to clarify the fees included in the lsquo10 per centrsquo test in
paragraph B336 of AASB 9 in assessing whether to derecognise a financial liability
explaining that only fees paid or received between the entity (the borrower) and the
lender including fees paid or received by either the entity or the lender on the otherrsquos
behalf are included
‒ AASB 16 Leases to amend Illustrative Example 13 to remove the illustration of the
reimbursement of leasehold improvements by the lessor in order to resolve any
potential confusion regarding the treatment of lease incentives that might arise
because of how lease incentives are illustrated in that example
‒ AASB 141 Agriculture to remove the requirement to exclude taxation cash flows when
measuring the fair value of a biological asset using a present value technique
bull AASB 3 Business Combinations to
‒ Refer to the Conceptual Framework for Financial Reporting instead of previous versions
of the Framework
‒ Add a requirement that for transactions and other events within the scope of AASB
137 Provisions Contingent Liabilities and Contingent Assets or Interpretation 21 Levies an
acquirer applies those pronouncements (instead of the Conceptual Framework) to
identify the liabilities it has assumed in a business combination
‒ Add an explicit statement that an acquirer does not recognise contingent assets
acquired in a business combination
bull AASB 116 Property Plant and Equipment to prohibit deducting from the cost of an item of
property plant and equipment any proceeds from selling items produced while bringing
that asset to the location and condition necessary for it to be capable of operating in the
manner intended by management Instead the proceeds from selling such items and the
cost of producing those items is recognised in profit or loss
bull AASB 137 Provisions Contingent Liabilities and Contingent Assets to specify that the lsquocost of
fulfillingrsquo an onerous contract comprises the lsquocosts that relate directly to the contractrsquo Costs
that relate directly to a contract can either be incremental costs of fulfilling that contract
(eg direct labour and materials) or an allocation of other costs that relate directly to
fulfilling contracts (eg the allocation of the depreciation charge for an item of property
plant and equipment used in fulfilling the contract)
More information IFRS in Focus newsletter (annual improvements) IFRS in Focus newsletter
(AASB 116 amendments) IFRS in Focus newsletter (AASB 137 amendments) IFRS in Focus
newsletter (AASB 3 amendments)
Annual periods
beginning on or
after
1 January 2022
(the amendments to
AASB 3 are effective
for business
combinations for
which the date of
acquisition is on or
after the beginning
of the first annual
period beginning on
or after
1 January 2022)
Optional
Tier 1 model financial statements | Whatrsquos new in financial reporting
xxviii
New or revised requirement When effective Applicability at
31 December
2020
AASB 2020-4 Amendments to Australian Accounting Standards ndash Covid-19-Related Rent
Concessions and AASB 2020-7 Amendments to Australian Accounting Standards ndash COVID-
19-Related Rental Concessions Tier 2 Disclosures
Amends AASB 16 Leases to
bull Provide lessees with a practical expedient that relieves a lessee from assessing whether a
COVID-19-related rent concession is a lease modification
bull Require lessees that apply the practical expedient to account for COVID-19-related rent
concessions as if they were not lease modifications
bull Require lessees that apply the practical expedient to disclose whether the practical
expedient has been applied to all eligible contracts or if not information about the nature
of the contracts to which the practical expedient has been applied
bull Require lessees to apply the practical expedient retrospectively recognising the cumulative
effect of applying the amendment as an adjustment to the opening retained earnings (or
other component of equity as appropriate) at the beginning of the annual reporting period
in which the lessee first applies the amendment
Note Early adoption of this Standard is permitted including in financial statements not authorised for
issue at the date it was issued (15 June 2020) AASB 2020-7 adds disclosure requirements for entities
applying AASB 1060 that have applied the practical expedient in AASB 16 for the accounting for
COVID-19-related rent concessions This latter Standard applies to annual periods beginning on or
after 1 July 2021 but can be early adopted
More information IFRS in Focus newsletter
Annual reporting
periods beginning
on or after
1 June 2020
(see note)
Optional
(full-years)
Mandatory
(half-years)
(see note)
AASB 2020-8 Amendments to Australian Accounting Standards ndash Interest Rate Benchmark
Reform ndash Phase 2
Amends AASB 9 Financial Instruments AASB 139 Financial Instruments Recognition and
Measurement AASB 7 Financial Instruments Disclosures and AASB 16 Leases to address issues that
may affect financial reporting during interest rate benchmark reform including the effect of
changes to contractual cash flows or hedging relationships resulting from the replacement of an
interest rate benchmark with an alternative benchmark rate
More information IFRS in Focus newsletter
Annual reporting
periods beginning
on or after
1 January 2021
Optional
355 New and revised Interpretations The table below outlines new and revised Interpretations which apply either to for-profit entities or that apply to both for-profit
and not-for-profit entities
New or revised requirement When effective Applicability to
31 December
2020
None noted as at 17 November 2020
Tier 1 model financial statements | Whatrsquos new in financial reporting
xxix
356 New and revised pronouncements applicable to not-for-profit entities only The table below outlines new and revised pronouncements which apply only to not-for-profit entities
New or revised requirement When effective Applicability at
31 December
2020
AASB 1059 Service Concession Arrangements Grantors AASB 2018-5 Amendments to
Australian Accounting Standards ndash Deferral of AASB 1059 and AASB 2019-2 Amendments to
Australian Accounting Standards ndash Implementation of AASB 1059
Addresses the accounting for a service concession arrangement by a grantor that is a public
sector entity by prescribing the accounting for the arrangement from the grantorrsquos perspective
The Standard is based on International Public Sector Accounting Standard IPSAS 32 Service
Concession Arrangements Grantor and takes into account AASB Interpretation 12 Service
Concession Arrangements which sets out the accounting for the operator in a public-to-private
service concession arrangement For example the principles for recognition of a service
concession asset are broadly consistent with AASB Interpretation 12
Note Although AASB 2018-5 is mandatory for annual reporting periods beginning on or after 1
January 2019 it has the effect of amending the application date of AASB 1059 to defer it to annual
periods beginning on or after 1 January 2020
Annual reporting
periods beginning
on or after
1 January 2020
Mandatory
AASB 2019-4 Amendments to Australian Accounting Standards ndashDisclosure in Special
Purpose Financial Statements of Not-for-Profit Private Sector Entities on Compliance with
Recognition and Measurement Requirements
Requires the following additional disclosures in special purpose financial statements of not-for-
profit private sector entities
bull The basis on which the decision to prepare special purpose financial statements was made
bull Where the entity has interests in other entities whether or not its subsidiaries and
associates have been consolidated or equity accounted (or reasons why the entity has not
consolidated or equity accounted) or that the entity has not determined whether its
interests in other entities give rise to interests in subsidiaries associates or joint ventures
(where permitted by legislation)
bull The material accounting policies applied and disclosed in the financial statements that do
not comply with all recognition and measurement requirements in Australian Accounting
Standards (except for the requirements in AASB 10 Consolidated Financial Statements or
AASB 128 Investments in Associates and Joint Ventures) and an indication of how it does not
comply or disclosure that such an assessment has not been made
bull Whether or not the financial statements overall comply with the recognition and
measurement requirements in Australian Accounting Standards (except for AASB 10 and
AASB 128) or that such an assessment has not been made
Annual reporting
periods ending on
or after
30 June 2020
Mandatory
(where applicable)
AASB 2019-7 Amendments to Australian Accounting Standards ndash Disclosure of GFS
Measures of Key Fiscal Aggregates and GAAPGFS Reconciliations
Amends AASB 1049 Whole of Government and General Government Sector Financial Reporting to
grant full optional relief from disclosing GFS measures of key fiscal aggregates and GAAPGFS
Reconciliations with additional disclosure to
bull Clarify that key fiscal aggregates presented on the financial statements are not GFS
measures
bull Explain (but not quantify) material differences between the GAAP and GFS measures of the
key fiscal aggregates if the option is selected
Annual periods
beginning on or
after
1 January 2020
Mandatory
Tier 1 model financial statements | Whatrsquos new in financial reporting
xxx
357 Other new pronouncements issued by the AASB The table below outlines new pronouncements issued by the AASB which are relevant in financial reporting
New or revised pronouncement When effective Applicability to
31 December 2020
AASB For-Profit Entity Standard-Setting Framework and AASB Not-for-Profit Entity
Standard-Setting Framework
Updated Standard-Setting Frameworks to reflect that several policy documents other
documents and Australian Accounting Standards have been superseded updated or issued
since the documents were last issued in 2018
Changes made to the documents include
bull Reflecting that in accordance with AASB 2020-2 for-profit private sector entities are no
longer permitted to prepare special purpose financial statements subject to limited
exceptions (for-profit entity Framework document only) and
bull Summarising the key principles on which Tier 2 disclosure requirements are developed
Not applicable
(Standard-Setting
Frameworks)
Not applicable
Bulletin Climate-related and other emerging risks disclosures assessing financial
statement materiality using AASB Practice Statement 2
Sets out the AASB and Auditing and Assurance Standards Boardrsquos (AuASB) view that
bull Investor statements on the importance of climate-related risks to their decision making
the impact of the materiality definition and AASB Practice Statement 2 (APS 2) is that
entities can no longer treat climate-related risks as merely a matter of corporate social
responsibility and should consider them also in the context of their financial statements
bull They expect that directors preparers and auditors will be considering APS 2 when
preparing and auditing financial statements for their next half and full year ends Even
though the guidance is not mandatory it represents the AASBrsquos best practice
interpretation of materiality and entities in Australia are already being subject to lawsuits
regarding lack of disclosure
Among other things the Bulletin sets out a number of key recommendations and financial
report consideration and explains how APS 2 applies to disclosing climate-related and other
emerging risks in financial statements
Note This pronouncement was originally published in December 2018 and subsequently reissued
in May 2019 (dated April 2019)
More information full text of the Bulletin
Not applicable
(Non-mandatory
pronouncement)
Optional
(Non-mandatory
pronouncement)
Tier 1 model financial statements | Whatrsquos new in financial reporting
xxxi
New or revised pronouncement When effective Applicability to
31 December 2020
Conceptual Framework for Financial Reporting
Revised version of the AASBrsquos framework for financial reporting based on an equivalent
pronouncement issued by the IASB The Conceptual Framework replaces an earlier version
updating a number of definitions and guidance introduces new guidance on a number of
topics including the reporting entity and presentation and disclosure and clarifies a number
of other matters
Note The purpose of the Conceptual Framework is to assist the AASB in developing and revising
Accounting Standards that are based on consistent concepts to help preparers to develop
consistent accounting policies for areas that are not covered by a standard or where there is choice
of accounting policy and to assist all parties to understand and interpret Accounting Standards
The lsquoStatus and Purposersquo section of the Conceptual Framework states ldquoThe Conceptual Framework is
not a Standard Nothing in the Conceptual Framework overrides any Standard or any requirement
in a Standard This is consistent with the Australian Securities and Investments Commission Act
2001 section 227(1)rdquo
Note The Conceptual Framework applies to for-profit sector entities that have public accountability
and are required by legislation to comply with Australian Accounting Standards and other for-profit
entities that elect to apply the Conceptual Framework and the consequential amendments to other
pronouncements set out in Accounting Standards AASB 2019-1 lsquoAmendments to Australian
Accounting Standards ndash References to the Conceptual Frameworkrsquo In addition AASB 2020-2
lsquoAmendments to Australian Accounting Standards ndash Removal of Special Purpose Financial
Statements for Certain For-Profit Private Sector Entitiesrsquo extends this application to (1) for-profit
private sector entities that are required by legislation to prepare financial statements that comply
with Australian Accounting Standards or accounting standards (2) other for-profit private sector
entities that are required only by their constituting document or another document to prepare
financial statements that comply with Australian Accounting Standards (provided that the relevant
document was created or amended on or after 1 July 2021) and (3) other for-profit entities that
elect to prepare general purpose financial statements The amendments in AASB 2020-2 apply to
annual reporting periods beginning on or after 1 July 2021
More information IFRS in Focus newsletter
Periods beginning on
or after
1 January 2020
(see notes)
Mandatory
(see note)
358 Pronouncements issued by the IASB or IFRS Interpretations Committee where an
equivalent pronouncement has not been issued by the AASB The table below outlines pronouncements made by the IASB or IFRS Interpretations Committee where an equivalent
pronouncement has not yet been made by the AASB at the date of this publication but is expected to be issued in due course
New or revised requirement When effective Applicability to
31 December 2020
None noted as at 17 November 2020
Tier 1 model financial statements | Whatrsquos new in financial reporting
xxxii
359 IFRS Interpretations Committee agenda decisions Along with its activity developing formal interpretations of IFRS and proposing that the IASB make amendments to Standards the
IFRS Interpretations Committee regularly publishes summaries of issues that it has decided not to add to its agenda often
accompanied by a discussion of the accounting issue submitted
Whilst the commentary included in an agenda decision is not formally part of IFRS it is an important source of guidance that
should be carefully considered when selecting a suitable accounting policy In many jurisdictions there is an expectation from
regulators that agenda decisions will be considered with the European Securities and Markets Authority (ESMA) for example
publicly stating an expectation to this effect
The table below outlines the agenda decisions published by the Committee since July 2019 grouped by the standards to which
they relate Where a decision relates to more than one standard it is listed under each standard Links in the table are to the IASB
website The IASB has also released the three volumes of its Compilation of Agenda Decisions covering all agenda decisions from
January 2019 to September 2020 (across the three volumes) The documents are available at wwwifrsorg
Pronouncement Agenda decision Month finalised More information
IFRS 9 Financial Instruments Fair value hedge of foreign currency risk on non-financial
assets
September 2019 Agenda decision
IFRS 15 Revenue from
Contracts with Customers
Compensation for delays or cancellations September 2019 Agenda decision
Training costs to fulfil a contract March 2020 Agenda decision
IFRS 16 Leases Lesseersquos incremental borrowing rate September 2019 Agenda decision
Lease term and useful life of leasehold improvements November 2019 Agenda decision
Definition of a lease ndash decision making rights January 2020 Agenda decision
Sale and leaseback with variable payments June 2020 Agenda decision
IAS 1 Presentation of Financial
Statements
Presentation of liabilities or assets related to uncertain
tax treatments
September 2019 Agenda decision
IAS 7 Statement of Cash Flows Disclosure of changes in liabilities arising from financing
activities
September 2019 Agenda decision
IAS 12 Income Taxes Presentation of liabilities or assets related to uncertain
tax treatments
September 2019 Agenda decision
Multiple tax consequences of recovering an asset April 2020 Agenda decision
Deferred tax related to an investment in subsidiary June 2020 Agenda decision
IAS 16 Property Plant and
Equipment
Lease term and useful life of leasehold improvements November 2019 Agenda decision
IAS 21 The Effects of Changes
in Foreign Exchange Rates
Cumulative exchange differences before a foreign
operation becomes hyperinflationary
March 2020 Agenda decision
Presenting comparative amounts when a foreign
operation becomes hyperinflationary
March 2020 Agenda decision
Translation of hyperinflationary foreign operation ndash
presenting exchange differences
March 2020 Agenda decision
IAS 29 Financial Reporting in
Hyperinflationary Economies
Cumulative exchange differences before a foreign
operation becomes hyperinflationary
March 2020 Agenda decision
Presenting comparative amounts when a foreign
operation becomes hyperinflationary
March 2020 Agenda decision
Translation of hyperinflationary foreign operation ndash
presenting exchange differences
March 2020 Agenda decision
IAS 38 Intangible Assets Player transfer payments June 2020 Agenda decision
Tier 1 model financial statements | Whatrsquos new in financial reporting
xxxiii
Pronouncement Agenda decision Month finalised More information
IAS 41 Agriculture Subsequent expenditure on biological assets September 2019 Agenda decision
3510 AASB agenda decisions Similar to the IFRS Interpretations Committee some issues that are raised for consideration by the AASB are either not added to
the agenda or are removed from the agenda when it is decided that an Interpretation will not be issued For such issues the AASB
normally provides its reasons for rejecting the issue in agenda decisions (sometimes called rejection statements)
Since July 2019 no agenda decisions have been published by the AASB
3511 Corporations Act 2001 developments The following amendments and regulations relevant to financial reporting have been recently made
Development When effective
Corporations Amendment (Proprietary Company Thresholds) Regulations 2019
Increases the thresholds under s45A used for determining whether proprietary companies are small
proprietary companies or large proprietary companies (see section 333)
Financial years beginning on or
after 1 July 2019
Corporations (Coronavirus Economic Response) Determination (No 3) 2020
Temporarily amends the provisions of the Corporations Act dealing with meetings and document
signatures that are not compatible with public health requirements for social distancing during the
coronavirus pandemic The Determination permits meetings such as annual general meetings to be
conducted using technology rather than face-to-face meetings allowing quorum votes notices and the
asking of questions to be filed electronically It also gives certainty that when company officers sign a
document electronically (including an electronic document) the document has been validly executed
Note This Determination repeals lsquoCorporations (Coronavirus Economic Response) Determination (No 1) 2020rsquo
which was in effect for six months from 5 May 2020 and had equivalent provisions
In effect for six months from the
day after which the instrument
was made (22 September 2020)
Corporations (Coronavirus Economic Response) Determination (No4) 2020
Modifies the operation of the civil penalty provisions in subsection 674(2) 674(2A) 675(2) and 675(2A)
of the Corporations Act to establish a temporary test based on a disclosing entity or its officersrsquo
knowledge recklessness or negligence with respect to whether certain information would have a
material effect on the price or value of its enhanced disclosure securities and therefore should be
disclosed under section 674 or 675 of the Act
Note This Determination repeals lsquoCorporations (Coronavirus Economic Response) Determination (No 2) 2020rsquo
which was in effect for six months from 25 May 2020 and had equivalent provisions
In effect for six months from the
day after which the instrument
was made (23 September 2020)
Tier 1 model financial statements | Whatrsquos new in financial reporting
xxxiv
3512 ASIC
New ASIC pronouncements guides and other materials The table below outlines financial reporting related ASIC instruments regulatory guides and other guidance which has been issued
or updated since 1 July 2019 Links are to the ASIC website or wwwlegislationgovau
Document Effective date Link to document
ASIC RG 247 Effective disclosure in an operating and financial review
This guide is designed for listed entities and their directors and sets out guidance for
directors on providing useful and meaningful information to shareholders or unit
holders when preparing an operating and financial review (OFR) in a directorsrsquo report
The guidance has been updated to
bull Highlight climate change as a systematic risk that could impact an entityrsquos financial
prospects for future years and that may need to be disclosed in an OFR
bull Reinforce that disclosures made outside of the OFR (such as under the voluntary
G20 Financial Stability Boardrsquos Taskforce on Climate Related Financial Disclosures
(TCFD) framework or in a sustainability report) should not be inconsistent with
disclosures made in the OFR
bull Make it clear that ASICrsquos general view that the risk of directors being found liable
for a misleading or deceptive forward-looking statement in an OFR is minimal
provided the statements are based on the best available evidence at the time
have a reasonable basis and there is ongoing compliance with the continuous
disclosure obligations when events overtake the relevant statement made in the
OFR
Published on
12 August 2019
Download
ASIC RG 58 Reporting by registered foreign companies and Australian companies
with foreign shareholders
A reissued version of RG 58 with minor updates to reflect the revised definition of a
large proprietary company
Published on
19 June 2020
Link to ASIC website
ASIC RG 115 Audit relief for proprietary companies
A reissued version of RG 115 with minor updates to reflect the revised definition of a
large proprietary company
Published on
19 June 2020
Link to ASIC website
ASIC RG 261 Crowd-sourced funding Guide for companies
A reissued version of RG 261 with minor updates to reflect the revised definition of a
large proprietary company and an increase in the maximum number of penalty units
for directors who do not do everything reasonably necessary to appoint an auditor
Published on
19 June 2020
Link to ASIC website
ASIC Corporations (Extended Reporting and Lodgment DeadlinesmdashUnlisted
Entities) Instrument 2020395 (as amended by ASIC Corporations
(Amendment) Instrument 2020452)
Implements temporary measures aimed at facilitating financial reporting by unlisted
entities whose reporting processes take additional time due to remote work
arrangements travel restrictions and other impacts of COVID-19 The temporary
measures are intended to allow unlisted entities up to one additional month to
complete financial reports and have those reports audited in compliance with the
financial reporting and audit requirements of the Corporations Act
For further background see ASICrsquos press releases 20-084MR ASIC to provide additional
time for unlisted entity financial reports and 20-113MR ASIC to further extend financial
reporting deadlines for listed and unlisted entities and amends lsquono actionrsquo position for AGMs
Note ASIC has announced it will extend the deadline for both listed and unlisted entities to
lodge financial reports (for both full years and half years) under Chapters 2M and 7 of the
Corporations Act 2001 by one month for certain balance dates up to and including
7 January 2021 balance dates Legislative instrument to enact these extensions had not been
made as at 17 November 2020
Financial years ending
between 31 December
2019 and 7 July 2020
(both inclusive)
(see note)
ASIC-CI 2020395
ASIC-CI 2020452
Tier 1 model financial statements | Whatrsquos new in financial reporting
xxxv
Document Effective date Link to document
ASIC Corporations (Amendment) Instrument 2020396 (as amended by ASIC
Corporations (Amendment) Instrument 2020452)
Amends the relief in ASIC Corporations (Exempt Proprietary Companies) Instrument
2015840 to provide eligible entities an additional month to send the financial report to
members as temporary relief in response to the COVID-19 crisis
Financial years ending
between 31 December
2019 and 7 July 2020
(both inclusive)
ASIC-CI 2020396
ASIC-CI 2020452
ASIC Corporations (Extended Reporting and Lodgment DeadlinesmdashListed Entities)
Instrument 2020451
Implements temporary measures aimed at facilitating financial reporting by listed
entities whose reporting processes take additional time due to current remote work
arrangements travel restrictions and other impacts of COVID-19 The temporary
measures are intended to allow listed entities up to one additional month to complete
financial reports and have those reports audited in compliance with the financial
reporting and audit requirements of the Corporations Act
For further background see ASIC press release 20-113MR ASIC to further extend
financial reporting deadlines for listed and unlisted entities and amends lsquono actionrsquo position
for AGMs
Note ASIC has announced it will extend the deadline for both listed and unlisted entities to
lodge financial reports (for both full years and half years) under Chapters 2M and 7 of the
Corporations Act 2001 by one month for certain balance dates up to and including
7 January 2021 balance dates Legislative instrument to enact these extensions had not been
made as at 17 November 2020
Financial years ending
between 21 February
2020 and 7 July 2020
(both inclusive)
Half years ending
between 15 March
2020 and 7 July 2020
(both inclusive)
(see note)
ASIC-CI 2020451
ASIC Corporations (COVID-19 Email Lodgement ServicemdashASIC Corporations (Wholly-
owned Companies) Instrument 2016785) Instrument 2020612
Facilitates the electronic signing and lodgement of documents under ASIC Corporations
(Wholly-owned Companies) Instrument 2016785 during COVID-19
Applies from 24 June
2020 and will cease to
apply on the day that
Corporations
(Coronavirus Economic
Response) Determination
(No 1) 2020 ceases to
be in force (being
5 November 2020)
ASIC-CI 2020612
ASIC Information Sheet INFO 245 Board oversight of executive variable pay
decisions during the COVID-19 pandemic
This information sheet sets out practical guidance to support board oversight and the
exercise of discretion on the variable pay outcomes of large listed companiesrsquo most
senior executives (cash andor equity) However governance is scalable and many
remuneration governance principles can be adopted by a broader range of listed
companies and in any market
The high-level guidance is informed by ASICrsquos review of remuneration governance
practices across 21 ASX 100 companies In addition to providing feedback directly to
these companies ASIC chose to release this information sheet to assist boards of other
listed companies to navigate decisions on executive variable pay in the context of the
COVID-19 pandemic
For further background see ASIC press release 20-133MR Info sheet 245 Board
oversight and discretion in executive variable pay schemes
na
(Information sheet)
INFO 245
Tier 1 model financial statements | Whatrsquos new in financial reporting
xxxvi
ASIC focus areas for financial reporting in light of COVID-19 In its frequently asked questions (FAQs) relating to the COVID-19 implications for financial reporting and audit ASIC notes that key
focus areas for financial reports for years ended 31 March 2020 to 30 June 2020 include
bull Recognition and measurement ndash including the values of assets (including intangibles property inventories
receivablesloans investments other financial assets contract assets and deferred tax assets) and liabilities including
provisions for onerous contracts financial guarantees and restructuring)
bull Disclosures ndash sources of estimation uncertainty key assumptions and sensitivity analysis and the operating and financial
review (OFR) (underlying drivers of results business strategies risks and future prospects)
bull Other areas ndash comprising going concern assessments and solvency
Other matters to consider may include hedge effectiveness sales returns off-balance sheet exposures and credit and liquidity
risks associated with financial instruments
The full text of the ASIC FAQs is available at wwwasicgovau
In early July 2020 ASIC also formally released its focuses for financial reporting under COVID-19 conditions as at 30 June 2020 The
key focus areas included in this release were
bull Asset values
bull Provisions
bull Solvency and going concern assessments
bull Events occurring after year end and before completion of the financial report
bull Disclosures in the financial report and Operating and Financial Review (OFR)
For more information see ASIC Media Release 20-157MR Focuses for financial reporting under COVID-19 conditions available at
wwwasicgovau
At the date of this publication ASIC has not yet released its focus areas for 31 December 2020 financial reports However the
above observations are likely to be largely applicable to the 31 December 2020 reporting period
Further guidance
For more information about ASICrsquos regulatory focus areas see our Clarity in financial reporting publication Regulatory
focus areas ndash financial reporting in a COVID-19 environment which is available at wwwdeloittecomauclarity
Results from prior ASIC financial report reviews
In July 2020 ASIC announced the results from a review of 31 December 2019 financial reports that covered 90 listed entities ASIC
made inquiries of 21 entities about 40 matters
The top areas where enquiries were raised from the review were
bull Revenue recognition
bull Impairment and other asset values
bull Tax accounting
bull Provisions
bull Financial instruments
bull Consolidation and equity accounting
ASIC also announced that it will review the full-year financial reports of about 200 larger listed entities and other public interest
entities as at 30 June 2020 The reviews will focus on entities and industries adversely affected by the current conditions ASIC
confirmed it will also review the adequacy of disclosure by some entities whose businesses have been positively affected
The full text of the findings can be found in ASIC media release 20-173MR ASIC review of 31 December 2019 financial reports which is
available at wwwasicgovau
Tier 1 model financial statements | Whatrsquos new in financial reporting
xxxvii
ASIC lsquono-actionrsquo position on right-of-use assets of AFS licensees ASIC has issued a temporary no-action position for Australian financial services (AFS) licensees in relation to potential breaches of
the financial resource requirements (net tangible asset requirement surplus liquid funds requirement or adjusted surplus liquid
funds requirement) that arise in the following circumstances
bull The breach was caused by the AFS licenseersquos inability to use a right-of-use asset to satisfy the financial resource requirement
bull hat inability arises from recent changes to the accounting treatment of lease assets (which may be seen as an intangible
asset) as a result of AASB 16 Leases
Although a temporary measure the no-action position applies until further notice ASIC plans to consult on proposals to change
the financial resource requirements to enable an AFS licensee to include a right-of-use lease asset when calculating whether it
meets its financial resource requirements
The release of ASICrsquos no action position addresses a long-running issue for AFS licensees and will be welcome by affected entities
For more information see
bull ASIC media release 20-158MR ASIC issues no-action position to allow right-of-use lease assets to count in satisfying AFS licensee
requirements
bull ASIC No-action position to allow right-of-use lease assets to count in satisfying AFS licensee requirements
ASIC calls on insurers to respond to new insurance standard
ASIC has issued a media release calling on insurers to respond to the new insurance standard AASB 17 Insurance Contracts
AASB 17 is effective for reporting periods beginning on or after 1 January 2023
In the media release ASIC Commissioner Cathie Armour states that [d]irectors and management of insurers need to plan for the
new standard and inform investors and other financial report users of the impact on reported results
The media release notes ASICs expectation that financial reports of insurers at 31 December 2020 should disclosure the impacts
of AASB 17
For more information see ASIC 20-286MR Insurers urged to respond to new accounting standard
Tier 1 model financial statements | Whatrsquos new in financial reporting
xxxviii
3513 ASX
New ASX rules guides and other materials The table below outlines financial reporting related ASX Listing Rules guides and other materials which has been issued or
updated since 1 July 2019 or which are applicable for the first time at 31 December 2020 or during the financial year then ended
Links are to the ASX website
Document Effective date Link to document
Update to ASX Listing Rules and associated guidance
Implements the following key changes
bull More guidance and direction on the information that should be given to
shareholders in notices of meetings
bull More guidance and direction on the voting processes that should be followed at
shareholder meetings and more consistent reporting of voting outcomes
bull Simpler and clearer processes and forms to announce a proposed issue of shares
and to seek their quotation
bull Changes to ASXrsquos quarterly reporting regime to provide a more robust disclosure
framework for start-up entities
bull Better and timelier disclosure by listed investment companies and listed
investment trusts of their net tangible assets (NTA) backing
bull New measures to address breaches of the listing rules
bull New and revised requirements around admission and educational requirements
for people communicating with the ASX
Most updated
requirements came
into effect from
1 December 2019 but
some items apply at a
later date
Announcement of
changes
Updated guidance notes
The following ASX Guidance Notes have been updated
bull GN 3 Co-operatives and Mutuals Listing on ASX
bull GN 4 Foreign Entities Listing on ASX
bull GN 12 Significant Changes to Activities
bull GN 19 Performance Shares
28 August 2020 Summary of
amendments
ASX Corporate Governance Principles and Recommendations
Fourth edition of the Corporate Governance Principles and Recommendations which
introduce or amend recommendations dealing with
bull A listed entityrsquos culture and values (including disclosure of the entityrsquos values)
bull Disclosure of the entityrsquos whistleblower policy and anti-bribery and corruption
policy (including material breaches of the policies)
bull Disclosure of the entityrsquos processes in verifying periodic releases and ensuring the
board receives copies of material market announcements
bull The release of substantive investor or analyst presentations prior to their
presentation
bull Ensuring substantive resolutions at security holder meetings are decided by poll
rather than a show of hands
bull Directors who does not speak the language in which board or security holder
meetings are held
bull Ensuring security holder meetings of entities established outside Australia are held
at a reasonable place and time
bull Diversity director independence and service requirements and environmental
and social risks
Effective for an entityrsquos
first full financial year
commencing on or
after 1 January 2020
Corporate Governance
Principles and
Recommendations
ASX Appendix 4C Quarterly cash flow report for entities subject to Listing Rule
47B
Updated requirements primarily to the materials in section 8 of the report relating to
estimated cash available for future operating activities which the ASX has determined a
number of entities have not been completing correctly
Issued July 2020 ASX Appendix 4C
Tier 1 model financial statements | Whatrsquos new in financial reporting
xxxix
Document Effective date Link to document
ASX Appendix 4G Key to Disclosures Corporate Governance Council Principles and
Recommendations
Updated to correct an error in the fourth edition version of the appendix
Issued July 2020 ASX Appendix 4G
ASX Appendix 5B Mining exploration entity or oil and gas exploration entity
quarterly cash flow report
Updated requirements primarily to the materials in section 8 of the report relating to
estimated cash available for future operating activities which the ASX has determined a
number of entities have not been completing correctly
Issued July 2020 ASX Appendix 5B
Class Waiver Decision ndashExtended Reporting and Lodgment Deadlines
Gives effect under the listing rules to ASIC Corporations (Extended Reporting and
Lodgment DeadlinesmdashListed Entities) Instrument 2020451 dated 15 May 2020 by
granting all entities admitted to the official list in the ASX Listing category the ability to
take advantage of the benefit of the ASIC relief
Note ASIC announced it will extend the deadline for both listed and unlisted entities to lodge
financial reports (for both full years and half years) under Chapters 2M and 7 of the
Corporations Act 2001 by one month for certain balance dates up to and including
7 January 2021 balance dates As at 17 November 2020 the ASX had not announced an
equivalent waiver to that noted above in respect of the ASIC relief Furthermore the ASIC
legislative instruments to give effect to the relief have not been made at that date
Effective for the
balance dates up to
and including
7 July 2020
Tier 1 model financial statements | Reporting deadlines
xl
4 Reporting deadlines 41 Summary of reporting deadlines for annual financial reporting The following table summarises the reporting deadlines under the Corporations Act and ASX Listing Rules (where relevant)
Source Requirement Listed
disclosing
entities
Non-listed
disclosing
entities
Public
companies
Proprietary
companies
Registered
schemes and
notified foreign
passport funds
Annual financial reporting
ASX 43A ASX 43B
Lodgement of Appendix
4E with the ASX
As soon as
available (and
no later than 2
months after
the year end)9
na na na na
ASX 45 ASX 451
Lodgement of the
Corporations Act
financial report and
concise report with the
ASX
As soon as
available (and
no later than 3
months after
the year end)
na na na na
ASX 471
ASX 472
Lodgement of the
Corporations Act annual
report and concise
report with the ASX
First day sent to
the members
(and the earlier
of 21 days
before the next
AGM or 4
months after
the end of the
financial year
(s315)) 10
na na na na
ASX 473 ASX 474
Lodgement of the
Appendix 4G with the
ASX (and Corporate
governance statement
(to the extent not
included in the annual
report)
Same time as
annual report
distributed to
the members
na na na na
s314
s315
Sending of financial
report to members
Earlier of 21
days before the
next AGM or 4
months after
the end of the
financial year
Earlier of 21
days before the
next AGM or 4
months after
the end of the
financial year
Earlier of 21
days before the
next AGM or 4
months after
the end of the
financial year
Within 4 months
after the end of
the financial year
Within 3 months
after the end of
the financial year
9 Mining exploration entities or oil and gas exploration entities are not required to provide the information set out in the Appendix 4E 10 If the entity is not established in Australia but required by the law of the place of its establishment to prepare an annual report and provide it to
the members this must be given to the ASX at the same time as distributed to the members (ASX 472)
Tier 1 model financial statements | Reporting deadlines
xli
Source Requirement Listed
disclosing
entities
Non-listed
disclosing
entities
Public
companies
Proprietary
companies
Registered
schemes and
notified foreign
passport funds
Annual financial reporting (continued)
s319 Lodgement of the
Corporations Act annual
report and concise
report with ASIC11 12
na
(ASIC-CI
2016181)
Within 3
months after
the year end
Within 4
months after
the year end
Within 4 months
after the year
end
Within 3 months
after the year
end
Annual general meetings
s250N Hold the AGM Within 5
months after
the year end (if
a public
company)
Within 5
months after
the year end (if
a public
company)
Within 5
months after
the year end
(unless
exempted) 13
na na
42 Dates applicable for 31 December 2020 reports 421 Relief available On 11 November 2020 ASIC issued media release 20-276MR ASIC to further extend financial reporting deadlines for listed and unlisted
entities and amends lsquono actionrsquo position for AGMs in which it announced that it
bull Will extend the deadline for both listed and unlisted entities to lodge financial reports (for both full years and half years) under
Chapters 2M and 7 of the Corporations Act 2001 by one month for certain balance dates up to and including 7 January 2021
balance dates
bull Has adopted a lsquono actionrsquo position where public companies do not hold their Annual General Meetings (AGMs) within five
months after the end financial years that end from 31 December 2019 to 7 January 2021 but do so up to seven months after
year end
As of 17 November 2020
bull ASIC has not released legislative instruments to give effect to the extended deadlines it has announced
bull The ASX has not announced equivalent relief for listed entities for lodgement of audited or reviewed reports with the ASX (so
that entities can take advantage of the ASIC lodgement relief as occurred at June 2020)
In addition a number of other COVID-19 concessions have been extended through two new instruments
bull Corporations (Coronavirus Economic Response) Determination (No 3) 2020 ndash this instrument extends the ability of entities to hold
annual general meetings (AGMs) and other prescribed meetings electronically and to sign documents electronically in the
period to 22 March 2021 (Determination media release)
bull Corporations (Coronavirus Economic Response) Determination (No 4) 2020 ndash this instrument extends the temporary continuous
disclosure requirements arising under the Corporations Act 2001 for the period to 23 March 2021 (Determination media
release)
11 An entity need not give ASIC the annual report if it comprises only the documents already given to the ASX under ASX Listing Rule 45 The entity
must tell ASIC if this is the case 12 If the entity is not established in Australia the annual report must be given to the ASX by the earlier of (a) the first day the entity sends the
documents to security holders under the law of the place of its establishment or (b) the last day for the documents to be given to security holders
under that law (see ASX Listing Rule 472) 13 A wholly-owned public company (ie a public company with one member) is not required to hold an AGM under s250N(4) Similarly under
s250N(5) and s250N(6) certain companies eligible for limited governance requirements under s738ZI (ie certain entities raising funds under
crowd-sourced funding arrangements are not required to hold an AGM This latter concession is only available to companies that register as or
convert to a public company after the commencement of the crowd-sourced funding regime under the Corporations Act For more information
on entities involved in crowd-sourced funding see our Australian financial reporting guide available at wwwdeloittecomaumodels
Tier 1 model financial statements | Reporting deadlines
xlii
422 Deadlines applicable for annual reporting periods ending 31 December 2020 The following table summarises the reporting deadlines for annual reporting periods ending 31 December 2020 based on ASICrsquos
announcement of relief to be enacted These reporting deadlines will be applicable to the majority of entities however care
should be taken to ensure that the dates noted below are the appropriate dates for the entity in question
Important note
As the legislative instruments giving effect to the announced ASIC reporting deadline relief have not been released as of
17 November 2020 the dates below have been based on the information in the ASIC media release and equivalent
relief granted at 30 June 2020 However the deadlines have not been adjusted for any equivalent lodgement relief that
might be provided by the ASX
Listed entities
Obligation Usual deadline Revised deadline
(expected)
Date for
31 December 2020
financial reports
Lodgement of Appendix 4E with ASX 2 months na 26 February 202114
Lodgement of audited annual financial report 3 months 3 months15 31 March 2021
Reporting to members ndash listed public companies Earlier of 21 days
before AGM or
4 months
Earlier of 21 days
before AGM or
5 months16
31 May 2021
Reporting to members ndash listed registered scheme 3 months 4 months16 30 April 2021
Holding of Annual General Meeting (AGM) 5 months 7 months17 31 July 202118
Unlisted entities
Obligation Usual deadline Revised deadline
(expected)
Date for
31 December 2020
financial reports
Lodgement of audited annual financial report with ASIC
bull Disclosing entities and registered schemes
bull Other entities
3 months
4 months
4 months
5 months
30 April 2021
31 May 2021
Reporting to members ndash public companies Earlier of 21 days
before AGM or
4 months
Earlier of 21 days
before AGM or
5 months
31 May 2021
Reporting to members ndash proprietary companies 4 months 5 months 31 May 2021
Holding of AGM ndash public companies 5 months 7 months 31 July 202118
14 As 28 February 2021 falls on a weekend under the ASX Listing Rules the obligation must be met on the previous business day 15 Although ASIC has announced a one month extension of this deadline will be implemented ASX Listing Rule 451 requires that the annual
financial report be given to the ASX no later than three months after the end of the financial year 16 ASIC has announced a one month extension of this deadline will be implemented As ASX Listing Rule 471 requires that the documents to be
given to the ASX by reference to inter alia ldquothe last date for the documents to be given to security holders under section 315 of the Corporations
Actrdquo the ASIC deadline (once enacted) will be applicable and therefore the ASIC revised deadline have been taken into account in the table 17 The holding of the AGM is a requirement imposed by the Corporations Act and is not referenced in the ASX Listing Rules Accordingly the ASIC
lsquono actionrsquo position applies 18 Where a deadline under the Corporations Act falls on a Saturday Sunday or public holiday section 36(2) of the Acts Interpretations Act 1901
permits the deadline to be met on the next day that is not a Saturday Sunday or public holiday 31 July 2021 is a Saturday but as this relief is being
provided by an ASIC lsquono actionrsquo position it is unclear whether the AGM deadline could be met on the next day that is not a Saturday Sunday or
public holiday as this is not a deadline under the Corporations Act 2001 nor an instrument made under any Act and accordingly it is unclear where
the Act Interpretations Act 1901 applies
Tier 1 model financial statements | Reporting deadlines
xliii
Other deadlines
Obligation Usual deadline Revised deadline
(expected)
Date for
31 December 2020
financial reports
Sending of the audited financial report to members by
grandfathered proprietary companies under ASIC
Corporations (Exempt Proprietary Companies) Instrument
2015840
4 months 5 months 31 May 2021
Preparation of consolidated financial statements under
ASIC Corporations (Wholly-owned Companies) Instrument
2016785
4 months 5 months 31 May 2021
Tier 1 model financial statements | Using the model financial statements
xliv
5 Using the model financial
statements
These model financial statements can be used as a guide in achieving
best practice outcomes in general purpose financial statements for
lsquoTier 1rsquo entities
Roadmap to this section
Topic What is covered Who does it apply to
51 Who should use these
model financial statements
Brief overview of who is required to prepare ldquoTier 1rsquo
financial statements under Australian Accounting
Standards
Entities preparing GPFS
52 Using the Deloitte model
IFRS financial statements for Tier
1 entities
Guidance on how to use the global model financial
statements designed for entities preparing Tier 1
GPFS in conjunction with Appendix 2 to the model
financial statements
Entities preparing Tier 1 GPFS
53 Other considerations Other information about using the model financial
statements
Entities preparing Tier 1 GPFS
Tier 1 model financial statements | Using the model financial statements
xlv
51 Who should use these model financial statements 511 Overview These financial statements are designed for entities required to comply with lsquoTier 1rsquo financial reporting requirements as set out in
AASB 1053 Application of Tiers of Australian Accounting Standards
AASB 1053 outlines the categories of entities that are required to comply with Tier 1 requirements
bull For-profit private sector entities that have public accountability
bull Australian Government State Territory and Local governments are required to comply with Tier 1 requirements
Other reporting entities can choose to comply with Tier 1 or Tier 2 reporting requirements
More information about Australiarsquos differential reporting framework can be found in the Australian
financial reporting guide available at wwwdeloittecomaumodels
512 Tier 1 and Tier 2 reports Entities preparing Tier 2 GPFS ndash Reduced Disclosure Requirements (RDR) are exempt from some of the disclosure requirements
set out in Accounting Standards as illustrated in these model financial statements The Accounting Standards set out disclosure
requirements from which Tier 2 entities applying RDR are exempt by shading the exempted requirements and adding special lsquoRDRrsquo
paragraphs RDR is being replaced by lsquoAustralian Accounting Standards ndash Simplified Disclosuresrsquo with effect from annual reporting
periods beginning on or after 1 July 2021
This International GAAP Holdings Limited model financial statements include disclosures that apply to Tier 1 general purpose
financial statements and do not illustrate the disclosures applicable to Tier 2 general purpose financial statements
Entities interested in applying Tier 2 (RDR) should refer to earlier editions of our model financial
statements and those wishing to apply lsquoSimplified Disclosuresrsquo should refer to our Simplified
Disclosures model financial statements These models are available at wwwdeloittecomaumodels
Tier 1 model financial statements | Using the model financial statements
xlvi
52 Using the Deloitte model IFRS financial statements for Tier 1 entities 521 Purpose The Deloitte model IFRS financial statements contained in the main section of this document illustrate the presentation and
disclosure requirements of IFRSs for the year ended 31 December 2020 by an entity that is not a first-time adopter of IFRSs They
comprise consolidated financial statements which illustrate the impact of the application of IFRSs that are mandatorily effective for
the annual period beginning on 1 January 2020
The Deloitte model IFRS financial statements however do not illustrate the presentation and disclosure requirements specific to
annual reports prepared in Australia Therefore Appendix 2 to the model financial statements has been designed by Deloitte
Touche Tohmatsu Australia to assist users with the preparation of annual reports in Australia in accordance with
bull Provisions of the Corporations Act 2001
bull Accounting Standards and Interpretations issued by the Australian Accounting Standards Board
bull Other requirements and guidelines current as at the date of issue including ASX Listing Rules ASIC Class OrdersCorporations
Instruments Regulatory Guides and Media Releases
522 How to use the main model financial statements in conjunction with Appendix 2 The table below outlines the composition of a Tier 1 financial report prepared under the Corporations Act 2001 The table lists the
relevant information from both the main model financial statements and those additional or alternative requirements included in
Appendix 2 ndash Australian-specific disclosures
Component Primary
source
Considerations
Corporations Act requirements
Directorsrsquo report Appendix 2
(page 206)
Entities preparing financial reports under the Corporations Act must
provide a directorsrsquo report Listed entities must also include a
Remuneration report as part of the directorsrsquo report
Auditorrsquos independence declaration Appendix 2
(page 234)
Entities preparing financial reports under the Corporations Act must
include the auditorrsquos independence
Independent auditorrsquos report Appendix 2
(page 236)
Entities preparing financial reports under the Corporations Act must
include an independent auditorrsquos report
Directorsrsquo declaration Appendix 2
(page 239)
Entities preparing financial reports under the Corporations Act must
include a directorsrsquo declaration
Primary financial statements
Consolidated statement of profit or loss and
other comprehensive income
- Alt 1 ndash Presentation as two statements
with expenses analysed by function
- Alt 2 ndash Single statement presentation
with expenses analysed by nature
Main model
financial
statements
Consolidated statement of financial position Main model
financial
statements
Australian entities commonly present the order of the statement of
financial position differently to entities preparing financial statement in
other countries An example of this alternate approach can be found on
page 240 Where the alternate version is adopted the ordering of the
notes should be reconsidered
Consolidated statement of changes in equity Main model
financial
statements
Tier 1 model financial statements | Using the model financial statements
xlvii
Component Primary
source
Considerations
Primary financial statements (continued0
Consolidated statement of cash flows
- Alt 1 ndash Indirect method of reporting
cash flows from operating activities
- Alt 2 ndash Direct method of reporting cash
flows from operating activities
Main model
financial
statements
Australian entities commonly adopt the direct method of presentation of
the statement of cash flows and in this case are additionally required to
provide a reconciliation of the net cash flows from operating activities to
profit or loss An illustrative disclosure is included in Note 55 on page
269
Notes to the consolidated financial statements (where supplemented by additional information in Appendix 2)
1 General information Appendix 2
(page 243)
Additional information is required in relation to compliance with
Australian Accounting Standards and rounding See Note 1 on page 243
2 Adoption of new and revised
Standards
Appendix 2
(page 245)
The updated and Australian-specific version of this note should be used
3 Significant accounting policies Main model
financial
statements
Australian entities may wish to include an additional accounting policy in
respect of goods and services tax (GST) See illustrative Note 3 on
page 260
8 Profit for the year Main model
financial
statements
Specific considerations apply in relation to rounding under ASIC
Corporations (Rounding in FinancialDirectorsrsquo Reports) Instrument 2016191
for certain share-based payment information
9 Employee benefit expense Main model
financial
statements
Specific considerations apply in relation to rounding under ASIC
Corporations (Rounding in FinancialDirectorsrsquo Reports) Instrument 2016191
for certain share-based payment information
13 Income tax Main model
financial
statements
Entities with tax-consolidated groups may need to provide additional
information See the additions to Note 21 on page 262
15 Dividends Main model
financial
statements
Specific considerations apply in relation to rounding under ASIC
Corporations (Rounding in FinancialDirectorsrsquo Reports) Instrument 2016191
for certain share-based payment information Australian entities are
required to provide information about imputation credits (franking
credits) See the example in Note 15 on page 261
16 Earnings per share Main model
financial
statements
Specific considerations apply in relation to rounding under ASIC
Corporations (Rounding in FinancialDirectorsrsquo Reports) Instrument 2016191
for earnings per share information
21 Subsidiaries Main model
financial
statements
Entities applying ASIC Corporations (Wholly owned Companies) Instrument
2016785 or with tax-consolidated groups may need to provide additional
information See the example in Note 21 in Appendix 2 on page 262
32 Trade and other receivables Main model
financial
statements
Where material entities may wish to include a separate line item setting
out the amount of goods and services tax recoverable See the example
in Note 32 in Appendix 2 on page 268
38 Trade and other payables Main model
financial
statements
Specific considerations apply in relation to rounding under ASIC
Corporations (Rounding in FinancialDirectorsrsquo Reports) Instrument 2016191
for certain share-based payment information
Where material entities may wish to include a separate line item setting
out the amount of goods and services tax recoverable See the trade
and other receivables example in Note 32 in Appendix 2 on page 268
42 Share premium account Main model
financial
statements
Under the Corporations Act Australian entities generally do not have a
par value for issued shares and accordingly this note may not be
relevant
Tier 1 model financial statements | Using the model financial statements
xlviii
Component Primary
source
Considerations
Notes to the consolidated financial statements (where supplemented by additional information in Appendix 2) (continued)
55 Notes to the cash flow statement Main model
financial
statements
Australian entities commonly adopt the direct method of presentation of
the statement of cash flows and in this case are additionally required to
provide a reconciliation of the net cash flows from operating activities to
profit or loss An illustrative disclosure is included in Note 55 in
Appendix 2 on page 269
65 Related party transactions Main model
financial
statements
Additional information is required for Australian entities in relation to
parent entities Example disclosures are included in Note 64 in
Appendix 2 on page 270
In addition the specific considerations apply in relation to rounding
under ASIC Corporations (Rounding in FinancialDirectorsrsquo Reports)
Instrument 2016191 for certain related party information including
remuneration of key management personnel
67 Remuneration of auditors Appendix 2
(page 271)
This Australian specific disclosure is required for entities applying Tier 1
Note 66 is available in Appendix 2 on page 271
68 Parent entity information Appendix 2
(page 273)
This additional note is required where consolidated financial reports are
prepared under the Corporations Act Note 68 is available in Appendix 2
on page 273
Other
ASX disclosures Appendix 2
(page 276)
Entities listed on the ASX are required to provide additional information
in their annual reports
ASX Corporate Governance Statement Appendix 2
(page 282)
Entities listed on the ASX are required to disclose the extent to which
they have complied with the best practice recommendations of the ASX
Corporate Governance Council during the reporting period
Tier 1 model financial statements | Using the model financial statements
xlix
53 Other considerations 531 Amounts The model financial statements are intended to illustrate the presentation and disclosure requirements of Accounting Standards
without the use of any actual numbers They also contain additional disclosures considered to be best practice particularly where
such disclosures are included in illustrative examples provided within a specific Standard
532 Additional disclosures included Note that in these model financial statements we have frequently included line items that are not applicable to International GAAP
Holdings Limited so as to illustrate items that are commonly encountered in practice This does not mean that we have illustrated
all possible disclosures nor should it be taken to mean that entities are required to display such line items in practice
533 Limitations We have developed this guide and the Deloitte model financial reports to assist you to meet the general financial reporting
requirements applying to many entities reporting under the Corporations Act General guidance cannot cover all possibilities or
deal with every possible permutation We have not dealt with specific industries and types of entities including
bull Entities that are investment entities under AASB 10 Consolidated Financial Statements
bull Entities where parent company or its subsidiaries are entities whose functional currency is the currency of a hyperinflationary
economy
bull Not-for-profit entities
bull Entities subject to the regulatory requirements of Australian Charities and Not-for-profits Commission (ACNC)
bull Australian financial services licences (AFSL) holders
bull Entities subject to the regulatory requirements of the Australian Prudential Regulation Authority (APRA)
bull Stapled entities
bull Notified foreign passport funds
Inquiries regarding specialised industries (eg life insurance companies credit unions etc) should be directed to an industry
specialist in your Deloitte Touche Tohmatsu office
534 Versions of pronouncements Unless otherwise specified these model financial statements only include references to Standards not yet effective (and not early
adopted) in the context of illustrating the disclosures specified by AASB 108 Accounting Policies Changes in Accounting Estimates and
Errors
535 Other pronouncements to consider The model financial statements do not illustrate the early adoption of any Accounting Standards or Interpretations that are not
mandatory as at 31 December 2020 Furthermore this guide does not illustrate the disclosure requirements of the following
Accounting Standards and Interpretations
Reference Title comment
AASB 1
AASB 4
AASB 6
AASB 14
AASB 17
First-time Adoption of Australian Accounting Standards
Insurance Contracts
Exploration for and Evaluation of Mineral Resources
Regulatory Deferral Accounts
Insurance Contracts
AASB 129
AASB 134
AASB 141
Financial Reporting in Hyperinflationary Economies
Interim Financial Reporting
Agriculture
AASB 1004
AASB 1023
AASB 1038
AASB 1039
AASB 1049
AASB 1050
Contributions
General Insurance Contracts
Life Insurance Contracts
Concise Financial Reports (other than as noted)
Whole of Government and General Government Sector Financial Reporting
Administered Items
Tier 1 model financial statements | Using the model financial statements
l
Reference Title comment
AASB 1051
AASB 1052
AASB 1053
AASB 1055
AASB 1056
AASB 1060
Land Under Roads
Disaggregated Disclosures
Application of tiers of Australian Accounting Standards
Budgetary Reporting
Superannuation Entities
General Purpose Financial Statements ndash Simplified Disclosures for For-Profit and Not-for-Profit Tier 2 Entities
Int 2
Int 7
Int 10
Int 12
Int 20
Int 129
Int 1019
Int 1003
Int 1019
Int 1038
Int 1042
Int 1047
Int 1055
Members Shares in Co-operative Entities and Similar Instruments
Applying the Restatement Approach under AASB 129 Financial Reporting in Hyperinflationary Economies
Interim Financial Reporting and Impairment
Service Concession Arrangements
Stripping Costs in the Production Phase of a Surface Mine
Service Concession Arrangements Disclosures
The Superannuation Contributions Surcharge
Australian Petroleum Resource Rent Tax
The Superannuation Contributions Surcharge
Contributions by Owners Made to Wholly-Owned Public sector Entities
Subscriber Acquisition Costs in the Telecommunications Industry
Professional Indemnity Claims Liabilities in Medical Defence Organisations
Accounting for Road Earthworks
536 Source references References to the relevant requirements are provided in the left hand column where relevant Where doubt exists as to the
appropriate treatment examination of the source of the disclosure requirement is recommended
537 Icons used in the models The following icons are used throughout the main model financial statements to indicate the following
Icon Meaning
Indicates that an Australian-specific consideration applies Additional information and cross reference to the relevant
section of Appendix 2 is noted
Indicates places where the model financial statements could be impacted by the effects of the COVID-19 pandemic
Indicates disclosures that might need to be adapted to explain how the group impacts orand is impacted by climate
change
The tables in Appendix 1 give an overview of all areas impacted by climate change andor COVID-19 and Appendix 2 provides
additional andor modified illustrative disclosures applicable to Tier 1 financial statements prepared for Australian entities
Tier 1 model financial statements | Core financial statements
li
Core financial statements
ContentsContents
Consolidated statement of profit or loss and other comprehensive income 1
Consolidated statement of financial position 12
Consolidated statement of changes in equity 15
Consolidated statement of cash flows 19
Notes to the consolidated financial statements 24
Independent Auditors Report 195
Appendix 1 ndash Areas of the model financial statements affected by climate change and COVID-19 196
International GAAP Holdings Limited
Source International GAAP Holdings Limited
IAS 151(b) IAS 110(b) IAS 110(ea) IAS 110A IAS 151(c)
Consolidated statement of profit or loss For the year ended 31 December 2020
31122020 31122019
IAS 1113 IAS 151(d) ndash (e) IAS 822
Note CU CU
Continuing operations
IAS 182(a)
IFRS 15113(a)
Revenue 5
IAS 199 - 103 Cost of sales
IAS 185 IAS 185A IAS 185B
Gross profit
Other income
IAS 199 - 103 Distribution costs
IAS 199 - 103 Administrative expenses
IAS 199 - 103 Other expenses
IAS 182(c) Share of results of associates 22
IAS 182(c) Share of results of joint ventures 23
IAS 197ndash98 Restructuring costs 7
Finance income ndash interest income 10
Finance income ndash other 10
IAS 182(aa) IFRS 720A
Gains and losses arising from the derecognition of financial assets measured at amortised cost
IAS 182(ca) Gains and losses on reclassification of financial assets from amortised cost to FVTPL
IAS 182(cb) Gains and losses on reclassification of financial assets from FVTOCI to FVTPL
IAS 182(ba) Impairment losses and gains (including reversals of impairment losses) on financial assets and contract assets
8
Other gains and losses 11
IAS 182(b) IFRS 1649
Finance costs 12
IAS 185 IAS 185A IAS 185B
Profit before tax
This symbol indicates that this area of the model financial statements may be impacted by the effects of the COVID-19 pandemic For further information on how it may be impacted please see the table in Appendix 1 For areas affected by the effects of COVID-19 it would be expected that the entity discusses in its disclosures how the area is affected
IAS 182(ba) requires impairment losses (including reversals of impairment losses or impairment gains) to be presented on the face of the statement of profit or loss These impairment losses may arise from operating activities or from investingfinancing activities Therefore when presenting a sub-total for operating profit it will be more meaningful to split the impairment losses into those which arise from operating activities for example from trade and other receivables above operating profit and those which arise from investingfinancing activities for example from debt securities below operating profit
1
International GAAP Holdings Limited
Source International GAAP Holdings Limited
IAS 182(d) IAS 1277
Income tax 13
IAS 185 IAS 185A IAS 185B
Profit for the year from continuing operations
Discontinued operationsIAS 182(ea) IFRS 533(a)
Loss for the year from discontinued operations 14
IAS 181A(a) Profit for the year 8
IAS 181B(a) Attributable to
Owners of the Company
Non-controlling interests
IAS 332ndash3 IAS 334A IAS 3366 IAS 3369
Earnings per share
From continuing operations
Basic 16
Diluted 16
From continuing and discontinued operations
Basic 16
Diluted 16
2
International GAAP Holdings Limited
Source International GAAP Holdings Limited
IAS 110A IAS 110(b) IAS 110(ea)
Consolidated statement of comprehensive income For the year ended 31 December 2020
31122020 31122019
IAS 1113 Note CU CU
IAS 110A Profit for the year
IAS 182A(a)(i) Items that will not be reclassified subsequently to profit or loss
Gains(losses) on property revaluation 44
Remeasurement of net defined benefit liability 59
IFRS 720(a)(vii) Fair value gain(loss) on investments in equity instruments designated as at FVTOCI
44
IFRS 720(a)(i) IFRS 9B579
Fair value gain(loss) on financial liabilities designated as at FVTPL attributable to changes in credit risk
46
IAS 182A(b)(i) Share of other comprehensive income of associates 22
IAS 182A(b)(i) Share of other comprehensive income of joint ventures 23
IAS 190 IAS 191(b)
Income tax relating to items that will not be reclassified subsequently to profit or loss
13
IAS 182A(a)(ii) Items that may be reclassified subsequently to profit or loss
Debt instruments measured at FVTOCI 44
IFRS 720(a)(viii) IFRS 95710 IFRS 9B571A
Fair value gain(loss) on investments in debt instruments measured at FVTOCI
IFRS 720(a)(viii) Less Cumulative (gain)loss on investments in debt instruments classified as at FVTOCI reclassified to profit or loss upon disposal
IAS 182(cb) Less Cumulative (gain)loss on investments in debt instruments classified as at FVTOCI reclassified to profit or loss upon reclassification from FVTOCI to FVTPL
IFRS 724C(b)(iv) IFRS 724E(a)
Cash flow hedges 47
IFRS 724E(a) IAS 196 IFRS 96511(d)(i)
Fair value gain(loss) arising on hedging instruments during the period
Less Cumulative (gain)loss arising on hedging instruments reclassified to profit or loss
Foreign currency translation net of investment hedges of a foreign operation
49
IAS 2152(b) Foreign exchange differences on translation of foreign operations
3
International GAAP Holdings Limited
Source International GAAP Holdings Limited
Less (Gain)loss reclassified to profit or loss on disposal of foreign operation
IFRS 724C(b) Gain(loss) arising on hedging instruments designated in hedges of the net assets in foreign operation
Less (Gain)loss on hedging instruments reclassified to profit or loss on disposal of foreign operation
IFRS 724E(b) - (c) IFRS 96515(b)(ii) - (iii) and (c) IFRS 96516 IAS 196
Cost of hedging 48
Changes in the fair value during the period in relation to transaction-related hedged items
Changes in the fair value during the period in relation to time-period related hedged items
Less Cumulative (gain)loss arising on changes in the fair value in relation to transaction-related hedged items reclassified to profit or loss
Less Amortisation to profit or loss of cumulative (gain)loss arising on changes in the fair value in relation to time-period related hedged item
IAS 182A(b)(ii) Share of other comprehensive income of associates 22
IAS 182A(b)(ii) Share of other comprehensive income of joint ventures 23
IAS 190 IAS 191(b)
Income tax relating to items that may be reclassified subsequently to profit or loss
13
IAS 181A(b) Other comprehensive income for the year net of income tax
IAS 181A(c) Total comprehensive income for the year
IAS 181B(b) Total comprehensive income attributable to
Owners of the Company
Non-controlling interests
Commentary
One statement vs two statements
IAS 1 permits an entity to present profit or loss and other comprehensive income (OCI) in either a single statement or in two separate but consecutive statements Alt 1 above illustrates the presentation of profit or loss and OCI in two separate but conscutive statements with expenses analysed by function Alt 2 (see the following pages) illustrates the presentation of profit or loss and OCI in one statement with expenses analysed by nature
Whichever presentation approach is adopted the distinction is retained between items recognised in profit or loss and items recognised in OCI Under both approaches profit or loss total OCI as well as comprehensive income for the period (being the total of profit or loss and OCI) should be presented Under the two‑statement approach the separate statement of profit or loss ends at lsquoprofit for the yearrsquo and this lsquoprofit for the yearrsquo is then the starting point for the statement of profit or loss and other comprehensive income In addition the analysis of lsquoprofit for the yearrsquo between the amount attributable to the owners of the Company and the amount attributable to non‑controlling interests is presented as part of the separate statement of profit or loss
Note that where the two‑statement approach is adopted (as below) as required by IAS 110A the statement of profit or loss must be displayed immediately before the statement of comprehensive income
4
International GAAP Holdings Limited
Source International GAAP Holdings Limited
Commentary
OCI items that may or may not be reclassified
Irrespective of whether the one‑statement or the two‑statement approach is followed the items of OCI should be classified by nature and grouped into those that in accordance with other IFRS Standards (a) will not be reclassified subsequently to profit or loss and (b) may be reclassified subsequently to profit or loss when specific conditions are met An entity should present its share of OCI of associates and joint ventures accounted for using the equity method separately from those arising from the Group
Presentation options for reclassification adjustments
In addition in accordance with IAS 194 an entity may present reclassification adjustments in the statement of profit or loss and other comprehensive income or in the notes In these model financial statements the reclassification adjustments have been presented in the notes
Presentation options for income tax relating to items of OCI
Furthermore for items of OCI additional presentation options are available as follows the individual items of OCI may be presented net of tax in the statement of profit or loss and other comprehensive income or they may be presented gross with a single line deduction for tax relating to those items by allocating the tax between the items that may be reclassified subsequently to the profit or loss section and those that will not be reclassified subsequently to profit or loss section as presented in these model financial statements Whichever option is selected the income tax relating to each item of OCI must be disclosed either in the statement of profit or loss and other comprehensive income or in the notes (see Note 13)
Subtotals
When an entity presents subtotals IAS 185A requires that those subtotals
a) comprise of line items made up of amounts recognised and measured in accordance with IFRS Standardsb) be presented and labelled in a manner that makes the line items that constitute the subtotal clear and
understandablec) be consistent from period to period andd) not be displayed with more prominence than the subtotals and totals required in IFRS Standards
Immaterial items
An entity need not provide a specific disclosure required by an IFRS Standard if the information resulting from that disclosure is not material This is the case even if the IFRS Standard contains a list of specific requirements or describes them as minimum requirements
5
International GAAP Holdings Limited
Source International GAAP Holdings Limited
IAS 110(b) IAS 110(ea) IAS 110A
Consolidated statement of profit or loss and other comprehensive income For the year ended 31 December 2020
31122020 31122019
IAS 1113 Note CU CU
Continuing operations
IAS 182(a)
IFRS 15113(a)
Revenue 5
Finance income ndash interest income 10
Finance income ndash other 10
IAS 199 Changes in inventories of finished goods and work in progress
IAS 199 Raw materials and consumables used
IAS 199 Depreciation and amortisation expenses
IAS 199 Employee benefits expense
IAS 182(b) IFRS 1649
Finance costs 12
IAS 199 Transport costs
IAS 199 Advertising costs
IAS 199 Impairment of property plant and equipment
Impairment of goodwill
Other expenses
IAS 197ndash98 Restructuring costs 7
IAS 182(c) Share of results of associates 22
IAS 182(c) Share of results of joint ventures 23
IAS 182(aa) IFRS 720A
Gains and losses arising from the derecognition of financial assets measured at amortised cost
IAS 182(ca) Gains and losses on reclassification of financial assets from amortised cost to FVTPL
IAS 182(ba) Impairment losses (including reversals of impairment losses) on financial assets and contract assets
8
IAS 182(cb) Gains and losses on reclassification of financial assets from FVTOCI to FVTPL
Other gains and losses 11
IAS 185 IAS 185A IAS 185B
Profit before tax
IAS 182(d) IAS 1277
Income tax 13
6
International GAAP Holdings Limited
Source International GAAP Holdings Limited
IAS 185 IAS 185A IAS 185B
Profit for the year from continuing operations
Discontinued operations
IAS 182(ea) IFRS 533(a)
Loss for the year from discontinued operations 14
IAS 181A(a) Profit for the year 8
Other comprehensive income for the year
IAS 182A(a)(i) Items that will not be reclassified subsequently to profit or loss
Gains(losses) on property revaluation 44
Remeasurement of net defined benefit liability 59
IFRS 720(a)(vii) Fair value gain(loss) on investments in equity instruments designated as at FVTOCI
44
IFRS 720(a)(i) IFRS 9B579
Fair value gain(loss) on financial liabilities designated as at FVTPL attributable to changes in credit risk
46
IAS 182A(b)(i) Share of other comprehensive income of associates 22
IAS 182A(b)(i) Share of other comprehensive income of joint ventures 23
IAS 190 IAS 191(b)
Income tax relating to items that will not be reclassified subsequently to profit or loss
13
IAS 182A(a)(ii) Items that may be reclassified subsequently to profit or loss
Debt instruments measured at FVTOCI 44
IFRS 720(a)(viii) IFRS 95710 IFRS 9B571A
Fair value gain(loss) on investments in debt instruments measured at FVTOCI
IFRS 720(a)(viii) Less Cumulative (gain)loss on investments in debt instruments classified as at FVTOCI reclassified to profit or loss upon disposal
IAS 182(cb) Less Cumulative (gain)loss on investments in debt instruments classified as at FVTOCI reclassified to profit or loss upon reclassification from FVTOCI to FVTPL
IFRS 724C(b)(iv) IFRS 724E(a)
Cash flow hedges 47
IFRS 724E(a) IAS 196 IFRS 96511(d)(i)
Fair value gain(loss) arising on hedging instruments during the period
Less Cumulative (gain)loss arising on hedging instruments reclassified to profit or loss
Foreign currency translation net of investment hedges of a foreign operation
49
IAS 2152(b) Foreign exchange differences on translation of foreign operations
7
International GAAP Holdings Limited
Source International GAAP Holdings Limited
Less (Gain)loss reclassified to profit or loss on disposal of foreign operation
IFRS 724C(b) Gain(loss) arising on hedging instruments designated in hedges of the net assets in foreign operation
Less (Gain)loss on hedging instruments reclassified to profit or loss on disposal of foreign operation
IFRS 724E(b) - (c) IFRS 96515(b)(ii) - (iii) and (c) IFRS 96516 IAS 196
Cost of hedging 48
Changes in the fair value during the period in relation to transaction-related hedged items
Changes in the fair value during the period in relation to time-period related hedged items
Less Cumulative (gain)loss arising on changes in the fair value in relation to transaction-related hedged items reclassified to profit or loss
Less Amortisation to profit or loss of cumulative (gain)loss arising on changes in the fair value in relation to time-period related hedged item
IAS 182A(b)(ii) Share of other comprehensive income of associates 22
IAS 182A(b)(ii) Share of other comprehensive income of joint ventures 23
IAS 190 IAS 191(b)
Income tax relating to items that may be reclassified subsequently to profit or loss
13
IAS 181A(b) Other comprehensive income for the year net of income tax
IAS 181A(c) Total comprehensive income for the year
IAS 181B(a) Profit for the year attributable to
Owners of the Company
Non-controlling interests
IAS 181B(b) Total comprehensive income attributable to
Owners of the Company
Non-controlling interests
IAS 332 - 3 IAS 334A IAS 3366 IAS 3369
Earnings per share
From continuing operations
Basic 16
Diluted 16
From continuing and discontinued operations
Basic 16
Diluted 16
Commentary
The format outlined above aggregates expenses according to their nature
8
International GAAP Holdings Limited
Source International GAAP Holdings Limited
IAS 110(a) IAS 110(ea) IAS 110(a) IAS 110(ea)
Consolidated statement of financial position ‑ Alt 1 As at 31 December 2020
IAS 1113 IAS 110(f) IAS 140A
IAS 110(f) IAS 140A IAS 822
Note 31122020 31122019 112019
CU CU (Restated)
CU (Restated)
IAS 160-61 IAS 166-68
Non‑current assets
IAS 155 Goodwill 17
IAS 154(c) Other intangible assets 18
IAS 154(a) Property plant and equipment 19
IAS 155 IFRS 1647(a)
Right-of-use assets 31
IAS 154(b) Investment property 20
IAS 154(e) IAS 155
Investments in associates 22
IAS 154(e) IAS 155
Interests in joint ventures 23
IAS 154(d) IAS 155
Investments in financial assets 25
IAS 154(d) IAS 155
Finance lease receivables 30
IAS 154(d) IAS 155
Derivative financial instruments 35
IAS 154(o) IAS 156
Deferred tax asset 36
IAS 155 IFRS 15105 IFRS 15116(a)
Contract assets 28
IAS 155 IFRS 15105 IFRS 1591 IFRS 1595
Contract costs 29
IAS 160-61 IAS 166-68
Current assets
IAS 154(g) Inventories 26
IAS 154(d) IAS 155
Investments 25
IAS 155 IFRS 15B21
Right to returned goods asset 27
IAS 155 IFRS 15105
Contract assets 28
IAS 155 IFRS 15105 IFRS 1591 IFRS 1595
Contract costs 29
9
International GAAP Holdings Limited
Source International GAAP Holdings Limited
IAS 154(d) IAS 155
Finance lease receivables 30
IAS 154(h) IFRS 15116(a)
Trade and other receivables 32
IAS 154(d) IAS 155
Derivative financial instruments 35
IAS 154(i) Cash and bank balances
IAS 154(j) IFRS 538 - 39
Assets classified as held for sale 14
IAS 155 - 55A Total assets
Commentary
IAS 140A requires an entity to present a statement of financial position as at the beginning of the preceding period (third statement of financial position) if
a) it applies an accounting policy retrospectively makes a retrospective restatement of items in its financial statements or reclassifies items in its financial statements and
b) the retrospective application retrospective restatement or the reclassification has a material effect on the information in the third statement of financial position
Other than disclosures of certain specified information as required by IAS 141 ndash 44 and IAS 8 the related notes to the third statement of financial position are not required to be disclosed
IAS 160 - 61 IAS 169-76
Current liabilities
IAS 154(k) Trade and other payables 38
IAS 154(n) IAS 156
Current tax liabilities
IAS 154(m) IAS 155 IFRS 1647(b)
Lease liabilities 37
IAS 154(m) IAS 155
Borrowings 33
IAS 154(m) IAS 155
Derivative financial instruments 35
IAS 154(m) IAS 155
Other financial liabilities 39
IAS 154(l) Provisions 40
IAS 155 Deferred income ndash government grant
60
IAS 155 IFRS 15105 IFRS 15116(a)
Contract liabilities 61
IAS 155 IFRS 15B21 IFRS 15119(d)
Refund liability 62
10
International GAAP Holdings Limited
Source International GAAP Holdings Limited
IAS 154(p) IFRS 538-39
Liabilities directly associated with assets classified as held for sale 14
Net current assets
IAS 160-61 IAS 169-76
Non‑current liabilities
IAS 154(m) IAS 155
Borrowings 33
IAS 154(m) IAS 155
Convertible loan notes 34
IAS 155 Retirement benefit obligations 59
IAS 154(o) IAS 156
Deferred tax liabilities 36
IAS 154(l) Provisions 40
IAS 155 Deferred income ndash government grant
60
IAS 155 IFRS 15105 IFRS 15116(a)
Contract liabilities 61
IAS 154(m) IAS 155 IFRS 1647(b)
Lease liabilities 37
IAS 154(m) IAS 155
Liability for share-based payments
58
IAS 155-55A Total liabilities
Net assets
Equity
Share capital 41
Share premium account 42
Other reserves 43 ndash 50
Retained earnings 51
IAS 154(r) Equity attributable to owners of the Company
IAS 154(q) IFRS 1022
Non-controlling interests 52
IAS 155 - 55A Total equity
The comparative information has been restated as a result of [the change in accounting policyprior period error] as discussed in note 2
11
International GAAP Holdings Limited
Australian entities commonly present the statement of financial position in adifferent order to that presented here An example of the common Australianpresentation can be found in Appendix 2
Source International GAAP Holdings Limited
IAS 110(a) IAS 110(ea)
IAS 1113 IAS 110(f) IAS 140A IAS 110(f) IAS 140A
Consolidated statement of financial position ‑ Alt 2 As at 31 December 2020
Note 31122020 31122019 112019
CU CU CU
(Restated) (Restated)
Assets
IAS 160ndash61 IAS 166-68
Non‑current assets
IAS 155 Goodwill 17
IAS 154(c) Other intangible assets 18
IAS 154(a) Property plant and equipment 19
IAS 155 IFRS 1647(a)
Right-of-use assets 31
IAS 154(b) Investment property 20
IAS 154(e) IAS 155
Investments in associates 22
IAS 154(e) IAS 155
Interests in joint ventures 23
IAS 154(d) IAS 155
Investments in financial assets 25
IAS 154(d) IAS 155
Finance lease receivables 30
IAS 154(d) IAS 155
Derivative financial instruments 35
IAS 154(o) IAS 156
Deferred tax asset 36
IAS 155 IFRS 15105 IFRS 15116(a)
Contract assets 28
IAS 155 IFRS 15105 IFRS 1591 IFRS 1595
Contract costs 29
IAS 155-55A Total non‑current assets
IAS 160 - 61 IAS 166-68
Current assets
IAS 154(g) Inventories 26
IAS 154(d) IAS 155
Investments 25
IAS 155 IFRS 15B21
Right to returned goods asset 27
IAS 155 IFRS 15105
Contract assets 28
IAS 155 IFRS 15105 IFRS 1591 IFRS 1595
Contract costs 29
12
International GAAP Holdings Limited
Source International GAAP Holdings Limited
IAS 154(d) IAS 155
Finance lease receivables 30
IAS 154(h) IFRS 15116(a)
Trade and other receivables 32
IAS 154(d) IAS 155
Derivative financial instruments 35
IAS 154(i) Cash and bank balances
IAS 154(j) IFRS 538ndash39
Assets classified as held for sale 14
Total current assets
IAS 155-55A Total assets
Equity and liabilities
Capital and reserves
Issued share capital and share premium
41 ndash 42
Other reserves 43 ndash 50
Retained earnings 51
IAS 154(r) Equity attributable to owners of the Company
IAS 154(q) IFRS 1022
Non-controlling interests 52
IAS 155-55A Total equity
IAS 160-61 IAS 169-76
Non‑current liabilities
IAS 154(m) IAS 155
Borrowings 33
IAS 154(m) IAS 155
Convertible loan notes 34
IAS 155 Retirement benefit obligations 59
IAS 154(o) IAS 156
Deferred tax liabilities 36
IAS 154(l) Provisions 40
IAS 155 Deferred income ndash government grant
60
IAS 155 IFRS 15105 IFRS 15116(a)
Contract liabilities 61
IAS 154(m) IAS 155 IFRS 1647(b)
Lease liabilities 37
IAS 154(m) IAS 155
Liability for share-based payments
58
Total non‑current liabilities
13
International GAAP Holdings Limited
Source International GAAP Holdings Limited
IAS 160-61 IAS 169-76
Current liabilities
IAS 154(k) Trade and other payables 38
IAS 154(n) IAS 156
Current tax liabilities
IAS 154(m) IAS 155 IFRS 1647(b)
Lease liabilities 37
IAS 154(m) IAS 155
Borrowings 33
IAS 154(m) IAS 155
Derivative financial instruments 35
IAS 154(m) IAS 155
Other financial liabilities 39
IAS 154(l) Provisions 40
IAS 155 Deferred income ndash government grant
60
IAS 155 IFRS 15105 IFRS 15116(a)
Contract liabilities 61
IAS 155 IFRS 15B21 IFRS 15119(d)
Refund liability 62
IAS 154(p) IFRS 538 - 39
Liabilities directly associated with assets classified as held for sale
14
IAS 155-55A Total current liabilities
IAS 155 - 55A Total liabilities
IAS 155-55A Total equity and liabilities
The comparative information has been restated as a result of [the change in accounting policyprior period error] discussed in note 2
14
International GAAP Holdings Limited
Source International GAAP Holdings Limited
IAS 110(c) IAS 110(ea) IAS 1106 IAS 1108
Consolidated statement of changes in equity for the year ended 31 December 2020
Equity attributable to equity holders of the parent
CA 2006 s610(1) IFRS 9658(a) IFRS 724E(a) IFRS 96511(a) and (d) IFRS 724E(b)-(c) IAS 2152(b) IFRS 96514
Share capital
Share premium
account
Own shares
Properties revaluation
reserve
Investments revaluation
reserve
Option premium
on convertible
notes
Financial liabilities at FVTPL
credit risk reserve
Cash flow hedging reserve
Cost of hedging reserve
Foreign exchange
translation reserve
Share-based
payments reserve
Retained earnings
Attributable to owners of
the parent
Non-controlling
interest
Total equity
CU CU CU CU CU CU CU CU CU CU CU CU CU CU CU
Balance at 1 January 2019
IAS 1106(b) IAS 849(c)
Effect of change in accounting policy for [insert as relevant] thinsp thinsp thinsp thinsp thinsp thinsp thinsp thinsp thinsp thinsp
Balance at 1 January 2019 ndash As restated thinsp thinsp thinsp thinsp thinsp thinsp thinsp thinsp thinsp thinsp
IAS 1106(d)(i) Profit for the year
IAS 1106(d)(ii) IAS 1106A
Other comprehensive income for the year thinsp thinsp thinsp thinsp thinsp thinsp thinsp thinsp thinsp thinsp
IAS 1106(a) Total comprehensive income for the year
IAS 1106(d)(iii) Issue of share capital
IAS 1107 Dividends
Transfer of cash flow hedging (gains)losses and cost of hedging to the initial carrying amount of hedged items
Transfer of credit risk reserve upon derecognition of the related financial liabilities
Transfer of investment revaluation reserve upon disposal of investments in equity instruments designated as at FVTOCI
Own shares acquired in the year
Credit to equity for equity-settled share-based payments
Deferred tax on share-based payment transactions
Balance at 31 December 2019 thinsp thinsp thinsp thinsp thinsp thinsp thinsp thinsp thinsp thinsp
15
International GAAP Holdings Limited
Source International GAAP Holdings Limited
IAS 110(c) IAS 110(ea) IAS 1106 IAS 1108
Consolidated statement of changes in equity for the year ended 31 December 2020
Equity attributable to equity holders of the parent
CA 2006 s610(1) IFRS 9658(a) IFRS 724E(a) IFRS 96511(a) and (d) IFRS 724E(b)-(c) IAS 2152(b) IFRS 96514
Share capital
Share premium
account
Own shares
Properties revaluation
reserve
Investments revaluation
reserve
Option premium
on convertible
notes
Financial liabilities at FVTPL
credit risk reserve
Cash flow hedging reserve
Cost of hedging reserve
Foreign exchange
translation reserve
Share-based
payments reserve
Retained earnings
Attributable to owners of
the parent
Non-controlling
interest
Total equity
CU CU CU CU CU CU CU CU CU CU CU CU CU CU CU
Balance at 1 January 2019
IAS 1106(b) IAS 849(c)
Effect of change in accounting policy for [insert as relevant] thinsp thinsp thinsp thinsp thinsp thinsp thinsp thinsp thinsp thinsp
Balance at 1 January 2019 ndash As restated thinsp thinsp thinsp thinsp thinsp thinsp thinsp thinsp thinsp thinsp
IAS 1106(d)(i) Profit for the year
IAS 1106(d)(ii) IAS 1106A
Other comprehensive income for the year thinsp thinsp thinsp thinsp thinsp thinsp thinsp thinsp thinsp thinsp
IAS 1106(a) Total comprehensive income for the year
IAS 1106(d)(iii) Issue of share capital
IAS 1107 Dividends
Transfer of cash flow hedging (gains)losses and cost of hedging to the initial carrying amount of hedged items
Transfer of credit risk reserve upon derecognition of the related financial liabilities
Transfer of investment revaluation reserve upon disposal of investments in equity instruments designated as at FVTOCI
Own shares acquired in the year
Credit to equity for equity-settled share-based payments
Deferred tax on share-based payment transactions
Balance at 31 December 2019 thinsp thinsp thinsp thinsp thinsp thinsp thinsp thinsp thinsp thinsp
16
International GAAP Holdings Limited
Source International GAAP Holdings Limited
Equity attributable to equity holders of the parent
CA 2006 s610(1) IFRS 9658(a) IFRS 724E(a) IFRS 96511(a) and (d) IFRS 724E(b)-(c) IAS 2152(b) IFRS 96514
Share capital
Share premium
account
Own shares
Properties revaluation
reserve
Investments revaluation
reserve
Option premium
on convertible
notes
Financial liabilities at FVTPL
credit risk reserve
Cash flow hedging reserve
Cost of hedging reserve
Foreign exchange
translation reserve
Share-based
payments reserve
Retained earnings
Attributable to owners of
the parent
Non-controlling
interest
Total equity
CU CU CU CU CU CU CU CU CU CU CU CU CU CU CU
Balance at 1 January 2020
IAS 1106(d)(i) Profit for the year
IAS 1106(d)(ii) IAS 1106A
Other comprehensive income for the year
IAS 1106(a) Total comprehensive income for the period
IAS 1106(d)(iii) Issue of share capital
IAS 1107 Dividends
Transfer of cash flow hedging (gains)losses and cost of hedging to the initial carrying amount of hedged items
Transfer of credit risk reserve upon derecognition of the related financial liabilities
Transfer of investment revaluation reserve upon disposal of investments in equity instruments designated as at FVTOCI
Own shares acquired in the year
Credit to equity for equity-settled share-based payments
Deferred tax on share-based payment transactions
Adjustment arising from change in non-controlling interest
Recognition of equity component of convertible loan notes
Deferred tax on equity component of convertible loan notes
Balance at 31 December 2020
17
International GAAP Holdings Limited
Source International GAAP Holdings Limited
Equity attributable to equity holders of the parent
CA 2006 s610(1) IFRS 9658(a) IFRS 724E(a) IFRS 96511(a) and (d) IFRS 724E(b)-(c) IAS 2152(b) IFRS 96514
Share capital
Share premium
account
Own shares
Properties revaluation
reserve
Investments revaluation
reserve
Option premium
on convertible
notes
Financial liabilities at FVTPL
credit risk reserve
Cash flow hedging reserve
Cost of hedging reserve
Foreign exchange
translation reserve
Share-based
payments reserve
Retained earnings
Attributable to owners of
the parent
Non-controlling
interest
Total equity
CU CU CU CU CU CU CU CU CU CU CU CU CU CU CU
Balance at 1 January 2020
IAS 1106(d)(i) Profit for the year
IAS 1106(d)(ii) IAS 1106A
Other comprehensive income for the year
IAS 1106(a) Total comprehensive income for the period
IAS 1106(d)(iii) Issue of share capital
IAS 1107 Dividends
Transfer of cash flow hedging (gains)losses and cost of hedging to the initial carrying amount of hedged items
Transfer of credit risk reserve upon derecognition of the related financial liabilities
Transfer of investment revaluation reserve upon disposal of investments in equity instruments designated as at FVTOCI
Own shares acquired in the year
Credit to equity for equity-settled share-based payments
Deferred tax on share-based payment transactions
Adjustment arising from change in non-controlling interest
Recognition of equity component of convertible loan notes
Deferred tax on equity component of convertible loan notes
Balance at 31 December 2020
18
International GAAP Holdings Limited
Source International GAAP Holdings Limited
IAS 110(d) IAS 110(ea) IAS 71 IFRS 533(c)
Consolidated statement of cash flows ‑ Alt 1 for the year ended 31 December 2020
31122020 31122019
IAS 1113 Note CU CU
Profit for the year
Adjustments for
Share of profit of associates
Share of profit of joint ventures
Finance income
Other gains and losses
Finance costs
Income tax expense
Gain on disposal of discontinued operations
Depreciation of property plant and equipment
Impairment loss on property plant and equipment
Depreciation of right-of-use assets
Impairment losses net of reversals on financial assets
Amortisation of intangible assets
Impairment of goodwill
Share-based payment expense
Fair value gainloss on investment property
Gain on disposal of property plant and equipment
Increase(decrease) in provisions
Fair value gainloss on derivatives and other financial assets held for trading
Difference between pension funding contributions paid and the pension cost charge
Operating cash flows before movements in working capital
Decrease(increase) in inventories
Decrease(increase) in trade and other receivables
Decrease(increase) in contract assets
Decrease(increase) in contract costs
Decrease(increase) in right to returned goods assets
Increase(decrease) in trade and other payables
Increase(decrease) in contract liabilities
Increase(decrease) in refund liability
Increase(decrease) in deferred income
Cash generated by operations
19
International GAAP Holdings Limited
Source International GAAP Holdings Limited
IAS 735 - 36 Income taxes paid
Net cash from operating activities
IAS 710 IAS 716 IAS 721 ndash 24 IFRS 9IGG2
Investing activities
IAS 731 Interest received
IAS 738 IAS 2419(d)
Dividends received from associates
IAS 738 IAS 2419(e)
Dividends received from joint ventures
IAS 731 Dividends received from equity instruments designated at FVTOCI
Proceeds on disposal of equity instruments held at FVTOCI
IAS 739 Proceeds on disposal of subsidiary 53
Proceeds on disposal of property plant and equipment
Purchases of property plant and equipment
IAS 2028 Government grants towards purchase of equipment
Acquisition of investment in an associate
Purchases of equity instruments designated at FVTOCI
Purchases of patents and trademarks
IAS 739 Acquisition of subsidiary 54
Cash received from the settlements of the derivative financial instruments held for hedging purposes
Cash paid due to the settlements of the derivative financial instruments held for hedging purposes
Net cash (used in)from investing activities
IAS 710 IAS 717 IAS 721 ndash 24 IFRS 9IGG2
Financing activities
IAS 731 IAS 734
Dividends paid
IAS 731 IFRS 1650(b)
Interest paid
IAS 721 Transaction costs related to loans and borrowings
IAS 717(d) Repayments of loans and borrowings
IAS 717(c) Proceeds from loans and borrowings
IAS 717(b) Repurchase of treasury shares
IAS 717(e) IFRS 1650(a)
Repayment of lease liabilities
20
International GAAP Holdings Limited
Source International GAAP Holdings Limited
IAS 717(c) Proceeds on issue of convertible loan notes
IAS 717(a) Proceeds on issue of shares
Proceeds from sale of own shares
Proceeds on disposal of partial interest in a subsidiary that does not involve loss of control 21
Cash received from the settlements of the derivative financial instruments used to hedge interest rate risk
Cash paid due to the settlements of the derivative financial instruments used to hedge interest rate risk
Net cash (used in)from financing activities
Net increase(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
IAS 728 Effect of foreign exchange rate changes
Cash and cash equivalents at end of year 55
Commentary
The above illustrates the indirect method of reporting cash flows from operating activities
21
International GAAP Holdings Limited
Source International GAAP Holdings Limited
IAS 110(d) IAS 110(ea) IAS 71 IAS 110(d) IAS 110(ea) IAS 71 IFRS 533(c)
Consolidated statement of cash flows ‑ Alt 2 For the year ended 31 December 2020
31122020 31122019
IAS 1113 Note CU CU
IAS 710 IAS 712-15 IAS 718-20
Cash from operating activities
Receipts from customers
IFRS 1650(c) Payments to suppliers and employees
Cash generated from operations
IAS 735 - 36 Income taxes paid
Net cash from operating activities
IAS 710 IAS 716 IAS 721 ndash 24 IFRS 9IGG2
Investing activities
IAS 731 Interest received
IAS 738 IAS 2419(d)
Dividends received from associates
IAS 738 IAS 2419(e)
Dividends received from joint ventures
IAS 731 Dividends received from equity instruments designated at FVTOCI
Proceeds on disposal of equity instruments held at FVTOCI
IAS 739 Proceeds on disposal of subsidiary 53
Proceeds on disposal of property plant and equipment
Purchases of property plant and equipment
IAS 2028 Government grants towards purchase of equipment
Acquisition of investment in an associate
Purchases of equity instruments designated at FVTOCI
Purchases of patents and trademarks
IAS 739 Acquisition of subsidiary 54
Cash received from the settlements of the derivative financial instruments held for hedging purposes
Cash paid due to the settlements of the derivative financial instruments held for hedging purposes
Net cash (used in)from investing activities
22
International GAAP Holdings Limited
Source International GAAP Holdings Limited
IAS 710 IAS 717 IAS 721 ndash 24 IFRS 9IGG2
Financing activities
IAS 731 IAS 734
Dividends paid
IAS 731 IFRS 1650(b)
Interest paid
IAS 721 Transaction costs related to loans and borrowings
IAS 717(d) Repayments of loans and borrowings
IAS 717(c) Proceeds from loans and borrowings
IAS 717(b) Repurchase of treasury shares
IAS 717(e) IFRS 1650(a)
Repayment of lease liabilities
IAS 717(c) Proceeds on issue of convertible loan notes
IAS 717(a) Proceeds on issue of shares
Proceeds from sale of treasury shares
Proceeds on disposal of partial interest in a subsidiary that does not involve loss of control
21
Cash received from the settlements of the derivative financial instruments used to hedge interest rate risk
Cash paid due to the settlements of the derivative financial instruments used to hedge interest rate risk
Net cash (used in)from financing activities
Net increase(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
IAS 728 Effect of foreign exchange rate changes
Cash and cash equivalents at end of year 55
Commentary
The above illustrates the direct method of reporting cash flows from operating activities
23
International GAAP Holdings Limited
Australian entities commonly adopt the direct method of presentation of thestatement of cash flows and in this case are additionally required to provide areconciliation of the net cash flows from operating activities to profit or loss Anillustrative disclosure is included in Appendix 2 in Note 55
Source International GAAP Holdings Limited
IAS 2413IAS 1138(a) and (c)
IAS 1138(b)
IAS 151(d) ndash (e)
IAS 814-15
IAS 828(a) IAS 828(c) IAS 828(b) IAS 828(d) IAS 828(e) IAS 828(f)(i)
Notes to the consolidated financial statements
For the year ended 31 December 2020
1 General information
International GAAP Holdings Limited (the Company) is a company limited by shares incorporated and registered in [A Land] Its ultimate controlling party is [name] The address of the Companyrsquos registered office is shown on page [X ]
The principal activities of the Company and its subsidiaries (the Group) and the nature of the Grouprsquos operations are set out in note 6
These financial statements are presented in Currency Units (CUs) and are rounded to the nearest CU Foreign operations are included in accordance with the policies set out in note 3
2 Adoption of new and revised Standards
Change in accounting policy
[Describe the nature of the change in accounting policy describe the transitional provisions (when applicable) and describe the transitional provisions that might have an effect on future periods (when applicable)]
The following table summarises the impact of the change in policy on the financial statements of the Group The impact of the change in policy on both basic and diluted earnings per share is presented in note 16
31122020 31122019
CU CU
Consolidated statement of profit or loss
[Describe captions affected]
Increase(decrease) in profit for the financial year
Consolidated statement of financial position
[Describe captions affected]
Increase(decrease) in net assets
IAS 828(g) IAS 828(h)
[Describe the amount of the adjustment relating to periods before those presented (to the extent practicable)]
[If retrospective application is impracticable for a particular prior period or for periods before those presented describe the circumstances that led to the existence of that condition and describe how and from when the change in accounting policy has been applied]
IAS 841 IAS 845
Prior period errors
IAS 849(a) IAS 849(b)(i)
[Describe the nature of the prior period error]
The following table summarises the impact of the prior period error on the financial statements of the Group The impact of the prior period error on both basic and diluted earnings per share is presented in note 16
31122019
CU
Consolidated statement of profit or loss
[Describe captions affected]
Increase(decrease) in profit for the financial year
Consolidated statement of financial position
[Describe captions affected]
Increase(decrease) in net assets
IAS 849(d) [If retrospective restatement is impracticable for a particular prior period the circumstances that led to the existence of that condition and a description of how and from when the error has been corrected]
24
International GAAP Holdings Limited
Source International GAAP Holdings Limited
IAS 828 New and amended IFRS Standards that are effective for the current year
Impact of the initial application of Interest Rate Benchmark Reform amendments to IFRS 9 and IFRS 7
In September 2019 the IASB issued Interest Rate Benchmark Reform (Amendments to IFRS 9 IAS 39 and IFRS 7) These amendments modify specific hedge accounting requirements to allow hedge accounting to continue for affected hedges during the period of uncertainty before the hedged items or hedging instruments affected by the current interest rate benchmarks are amended as a result of the on-going interest rate benchmark reforms
The amendments are relevant to the Group given that it applies hedge accounting to its benchmark interest rate exposures The application of the amendments impacts the Grouprsquos accounting in the following ways
bull The Group has floating rate debt linked to CU IBOR which it cash flow hedges using interest rate swaps The amendments permit continuation of hedge accounting even though there is uncertainty about the timing and amount of the hedged cash flows due to the interest rate benchmark reforms
bull The Group has issued [Currency B]-denominated fixed rate debt which it fair value hedges using [Currency B]-fixed to [Currency B] IBOR interest rate swaps The amendments permit continuation of hedge accounting even if in the future the hedged benchmark interest rate [Currency B] IBOR may no longer be separately identifiable However this relief does not extend to the requirement that the designated interest rate risk component must continue to be reliably measureable If the risk component is no longer reliably measurable the hedging relationship is discontinued
bull The Group will retain the cumulative gain or loss in the cash flow hedge reserve for designated cash flow hedges that are subject to interest rate benchmark reforms even though there is uncertainty arising from the interest rate benchmark reform with respect to the timing and amount of the cash flows of the hedged items Should the Group consider the hedged future cash flows are no longer expected to occur due to reasons other than interest rate benchmark reform the cumulative gain or loss will be immediately reclassified to profit or loss
The amendments also introduce new disclosure requirements to IFRS 7 for hedging relationships that are subject to the exceptions introduced by the amendments to IFRS 9 The new disclosure requirements are presented in note 63(c)(ii)
Impact of the initial application of Covid‑19‑Related Rent Concessions Amendment to IFRS 16
IFRS 1646A
IFRS 1646B
In May 2020 the IASB issued Covid-19-Related Rent Concessions (Amendment to IFRS 16) that provides practical relief to lessees in accounting for rent concessions occurring as a direct consequence of COVID-19 by introducing a practical expedient to IFRS 16 The practical expedient permits a lessee to elect not to assess whether a COVID-19-related rent concession is a lease modification A lessee that makes this election shall account for any change in lease payments resulting from the COVID-19-related rent concession the same way it would account for the change applying IFRS 16 if the change were not a lease modification
The practical expedient applies only to rent concessions occurring as a direct consequence of COVID-19 and only if all of the following conditions are met
a) The change in lease payments results in revised consideration for the lease that is substantially the same as or less than the consideration for the lease immediately preceding the change
b) Any reduction in lease payments affects only payments originally due on or before 30 June 2021 (a rent concession meets this condition if it results in reduced lease payments on or before 30 June 2021 and increased lease payments that extend beyond 30 June 2021) and
c) There is no substantive change to other terms and conditions of the lease
IAS 828(a)-(c) IFRS 16C1A
IFRS 1660A(a)
In the current financial year the Group has applied the amendment to IFRS 16 (as issued by the IASB in May 2020) in advance of its effective date
Impact on accounting for changes in lease payments applying the exemption
The Group has applied the practical expedient retrospectively to all rent concessions that meet the conditions in IFRS 1646B and has not restated prior period figures
25
International GAAP Holdings Limited
An Australian version of Note 2 can be found in Appendix 2 Australianentities should refer to this alternate version in developing theirdisclosures
Source International GAAP Holdings Limited
IFRS 1660A(b)
The Group has benefited from a __ month waiver of lease payments on buildings in [A land] The waiver of lease payments of CU__ has been accounted for as a negative variable lease payment in profit or loss The Group has derecognised the part of the lease liability that has been extinguished by the forgiveness of lease payments consistent with the requirements of IFRS 9331
The Group has benefited from a __ month lease payment holiday on buildings in [B land] The payment holiday reduces payments in the period to [date] by CU__ and increases in payments in the period to [date] by CU__ The Group has remeasured the lease liability using the revised lease payments and the discount rate originally applied to the lease resulting in a decrease in the lease liability of CU__ which has been recognised as a negative variable lease payment in profit or loss The Group continued to recognise interest expense on the lease liability
Impact of the initial application of other new and amended IFRS Standards that are effective for the current year
IAS 828 In the current year the Group has applied the below amendments to IFRS Standards and Interpretations issued by the Board that are effective for an annual period that begins on or after 1 January 2020 Their adoption has not had any material impact on the disclosures or on the amounts reported in these financial statements
Amendments to References to the Conceptual Framework in IFRS Standards
The Group has adopted the amendments included in Amendments to References to the Conceptual Framework in IFRS Standards for the first time in the current year The amendments include consequential amendments to affected Standards so that they refer to the new Framework Not all amendments however update those pronouncements with regard to references to and quotes from the Framework so that they refer to the revised Conceptual Framework Some pronouncements are only updated to indicate which version of the Framework they are referencing to (the IASC Framework adopted by the IASB in 2001 the IASB Framework of 2010 or the new revised Framework of 2018) or to indicate that definitions in the Standard have not been updated with the new definitions developed in the revised Conceptual Framework
The Standards which are amended are IFRS 2 IFRS 3 IFRS 6 IFRS 14 IAS 1 IAS 8 IAS 34 IAS 37 IAS 38 IFRIC 12 IFRIC 19 IFRIC 20 IFRIC 22 and SIC-32
Amendments to IFRS 3 Definition of a business
The Group has adopted the amendments to IFRS 3 for the first time in the current year The amendments clarify that while businesses usually have outputs outputs are not required for an integrated set of activities and assets to qualify as a business To be considered a business an acquired set of activities and assets must include at a minimum an input and a substantive process that together significantly contribute to the ability to create outputs
The amendments remove the assessment of whether market participants are capable of replacing any missing inputs or processes and continuing to produce outputs The amendments also introduce additional guidance that helps to determine whether a substantive process has been acquired
The amendments introduce an optional concentration test that permits a simplified assessment of whether an acquired set of activities and assets is not a business Under the optional concentration test the acquired set of activities and assets is not a business if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar assets The amendments are applied prospectively to all business combinations and asset acquisitions for which the acquisition date is on or after 1 January 2020
Amendments to IAS 1 and IAS 8 Definition of material
The Group has adopted the amendments to IAS 1 and IAS 8 for the first time in the current year The amendments make the definition of material in IAS 1 easier to understand and are not intended to alter the underlying concept of materiality in IFRS Standards The concept of obscuring material information with immaterial information has been included as part of the new definition
The threshold for materiality influencing users has been changed from could influence to could reasonably be expected to influence The definition of material in IAS 8 has been replaced by a reference to the definition of material in IAS 1 In addition the IASB amended other Standards and the Conceptual Framework that contain a definition of material or refer to the term lsquomaterialrsquo to ensure consistency
26
International GAAP Holdings Limited
Source International GAAP Holdings Limited
IAS 830 - 31 New and revised IFRS Standards in issue but not yet effective
Commentary
Entities are required to disclose in their financial statements the potential impact of new and revised IFRS Standards that have been issued but are not yet effective The disclosures below reflect a cut off date of 31 July 2020 The potential impact of the application of any new and revised IFRS Standard issued by the IASB after 31 July 2020 but before the financial statements are issued should also be considered and disclosed The impact of the application of the new and revised IFRS Standards (see below) is for illustrative purposes only Entities should analyse the impact based on their specific facts and circumstances
At the date of authorisation of these financial statements the Group has not applied the following new and revised IFRS Standards that have been issued but are not yet effective
Commentary
The above statement should be tailored to be specific to the entity
Most jurisdictions have a mechanism for incorporating IFRS Standards into their financial reporting system These mechanisms range from direct adoption of IFRS Standards as issued by the IASB through adopting local standards that are equivalent to IFRS Standards to the extensive endorsement mechanism used in the European Union
The impact of the application of the new and revised IFRS Standards below is for illustrative purposes only Entities should analyse the impact of these new or revised IFRS Standards on their financial statements based on their specific facts and circumstances and make appropriate disclosures
IFRS 17 Insurance Contracts
IFRS 10 and IAS 28 (amendments) Sale or Contribution of Assets between an Investor and its Associate or Joint Venture
Amendments to IAS 1 Classification of Liabilities as Current or Non-current
Amendments to IFRS 3 Reference to the Conceptual Framework
Amendments to IAS 16 Property Plant and EquipmentmdashProceeds before Intended Use
Amendments to IAS 37 Onerous Contracts ndash Cost of Fulfilling a Contract
Annual Improvements to IFRS Standards 2018-2020 Cycle
Amendments to IFRS 1 First-time Adoption of International Financial Reporting Standards IFRS 9 Financial Instruments IFRS 16 Leases and IAS 41 Agriculture
The directors do not expect that the adoption of the Standards listed above will have a material impact on the financial statements of the Group in future periods except as noted below
IFRS 17 Insurance Contracts
IFRS 17 establishes the principles for the recognition measurement presentation and disclosure of insurance contracts and supersedes IFRS 4 Insurance Contracts
IFRS 17 outlines a general model which is modified for insurance contracts with direct participation features described as the variable fee approach The general model is simplified if certain criteria are met by measuring the liability for remaining coverage using the premium allocation approach
The general model uses current assumptions to estimate the amount timing and uncertainty of future cash flows and it explicitly measures the cost of that uncertainty It takes into account market interest rates and the impact of policyholdersrsquo options and guarantees
27
International GAAP Holdings Limited
Source International GAAP Holdings Limited
In June 2020 the IASB issued Amendments to IFRS 17 to address concerns and implementation challenges that were identified after IFRS 17 was published The amendments defer the date of initial application of IFRS 17 (incorporating the amendments) to annual reporting periods beginning on or after 1 January 2023 At the same time the IASB issued Extension of the Temporary Exemption from Applying IFRS 9 (Amendments to IFRS 4) that extends the fixed expiry date of the temporary exemption from applying IFRS 9 in IFRS 4 to annual reporting periods beginning on or after 1 January 2023
IFRS 17 must be applied retrospectively unless impracticable in which case the modified retrospective approach or the fair value approach is applied
For the purpose of the transition requirements the date of initial application is the start if the annual reporting period in which the entity first applies the Standard and the transition date is the beginning of the period immediately preceding the date of initial application
Amendments to IFRS 10 and IAS 28 ndash Sale or Contribution of Assets between an Investor and its Associate or Joint Venture
The amendments to IFRS 10 and IAS 28 deal with situations where there is a sale or contribution of assets between an investor and its associate or joint venture Specifically the amendments state that gains or losses resulting from the loss of control of a subsidiary that does not contain a business in a transaction with an associate or a joint venture that is accounted for using the equity method are recognised in the parentrsquos profit or loss only to the extent of the unrelated investorsrsquo interests in that associate or joint venture Similarly gains and losses resulting from the remeasurement of investments retained in any former subsidiary (that has become an associate or a joint venture that is accounted for using the equity method) to fair value are recognised in the former parentrsquos profit or loss only to the extent of the unrelated investorsrsquo interests in the new associate or joint venture
The effective date of the amendments has yet to be set by the Board however earlier application of the amendments is permitted The directors of the Company anticipate that the application of these amendments may have an impact on the Groups consolidated financial statements in future periods should such transactions arise
Amendments to IAS 1 ndash Classification of Liabilities as Current or Non-current
The amendments to IAS 1 affect only the presentation of liabilities as current or non-current in the statement of financial position and not the amount or timing of recognition of any asset liability income or expenses or the information disclosed about those items
The amendments clarify that the classification of liabilities as current or non-current is based on rights that are in existence at the end of the reporting period specify that classification is unaffected by expectations about whether an entity will exercise its right to defer settlement of a liability explain that rights are in existence if covenants are complied with at the end of the reporting period and introduce a definition of lsquosettlementrsquo to make clear that settlement refers to the transfer to the counterparty of cash equity instruments other assets or services
The amendments are applied retrospectively for annual periods beginning on or after 1 January 2023 with early application permitted
Amendments to IFRS 3 ndash Reference to the Conceptual Framework
The amendments update IFRS 3 so that it refers to the 2018 Conceptual Framework instead of the 1989 Framework They also add to IFRS 3 a requirement that for obligations within the scope of IAS 37 an acquirer applies IAS 37 to determine whether at the acquisition date a present obligation exists as a result of past events For a levy that would be within the scope of IFRIC 21 Levies the acquirer applies IFRIC 21 to determine whether the obligating event that gives rise to a liability to pay the levy has occurred by the acquisition date
Finally the amendments add an explicit statement that an acquirer does not recognise contingent assets acquired in a business combination
The amendments are effective for business combinations for which the date of acquisition is on or after the beginning of the first annual period beginning on or after 1 January 2022 Early application is permitted if an entity also applies all other updated references (published together with the updated Conceptual Framework) at the same time or earlier
28
International GAAP Holdings Limited
Source International GAAP Holdings Limited
Amendments to IAS 16 ndash Property Plant and EquipmentmdashProceeds before Intended Use
The amendments prohibit deducting from the cost of an item of property plant and equipment any proceeds from selling items produced before that asset is available for use ie proceeds while bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management Consequently an entity recognises such sales proceeds and related costs in profit or loss The entity measures the cost of those items in accordance with IAS 2 Inventories
The amendments also clarify the meaning of lsquotesting whether an asset is functioning properlyrsquo IAS 16 now specifies this as assessing whether the technical and physical performance of the asset is such that it is capable of being used in the production or supply of goods or services for rental to others or for administrative purposes
If not presented separately in the statement of comprehensive income the financial statements shall disclose the amounts of proceeds and cost included in profit or loss that relate to items produced that are not an output of the entityrsquos ordinary activities and which line item(s) in the statement of comprehensive income include(s) such proceeds and cost
The amendments are applied retrospectively but only to items of property plant and equipment that are brought to the location and condition necessary for them to be capable of operating in the manner intended by management on or after the beginning of the earliest period presented in the financial statements in which the entity first applies the amendments
The entity shall recognise the cumulative effect of initially applying the amendments as an adjustment to the opening balance of retained earnings (or other component of equity as appropriate) at the beginning of that earliest period presented
The amendments are effective for annual periods beginning on or after 1 January 2022 with early application permitted
Amendments to IAS 37 ndash Onerous ContractsmdashCost of Fulfilling a Contract
The amendments specify that the lsquocost of fulfillingrsquo a contract comprises the lsquocosts that relate directly to the contractrsquo Costs that relate directly to a contract consist of both the incremental costs of fulfilling that contract (examples would be direct labour or materials) and an allocation of other costs that relate directly to fulfilling contracts (an example would be the allocation of the depreciation charge for an item of property plant and equipment used in fulfilling the contract)
The amendments apply to contracts for which the entity has not yet fulfilled all its obligations at the beginning of the annual reporting period in which the entity first applies the amendments Comparatives are not restated Instead the entity shall recognise the cumulative effect of initially applying the amendments as an adjustment to the opening balance of retained earnings or other component of equity as appropriate at the date of initial application
The amendments are effective for annual periods beginning on or after 1 January 2022 with early application permitted
Annual Improvements to IFRS Standards 2018ndash2020
The Annual Improvements include amendments to four Standards
IFRS 1 First-time Adoption of International Financial Reporting Standards
The amendment provides additional relief to a subsidiary which becomes a first-time adopter later than its parent in respect of accounting for cumulative translation differences As a result of the amendment a subsidiary that uses the exemption in IFRS 1D16(a) can now also elect to measure cumulative translation differences for all foreign operations at the carrying amount that would be included in the parentrsquos consolidated financial statements based on the parentrsquos date of transition to IFRS Standards if no adjustments were made for consolidation procedures and for the effects of the business combination in which the parent acquired the subsidiary A similar election is available to an associate or joint venture that uses the exemption in IFRS 1D16(a)
The amendment is effective for annual periods beginning on or after 1 January 2022 with early application permitted
29
International GAAP Holdings Limited
Source International GAAP Holdings Limited
IFRS 9 Financial Instruments
The amendment clarifies that in applying the lsquo10 per centrsquo test to assess whether to derecognise a financial liability an entity includes only fees paid or received between the entity (the borrower) and the lender including fees paid or received by either the entity or the lender on the otherrsquos behalf
The amendment is applied prospectively to modifications and exchanges that occur on or after the date the entity first applies the amendment
The amendment is effective for annual periods beginning on or after 1 January 2022 with early application permitted
IFRS 16 Leases
The amendment removes the illustration of the reimbursement of leasehold improvements
As the amendment to IFRS 16 only regards an illustrative example no effective date is stated
IAS 41 Agriculture
The amendment removes the requirement in IAS 41 for entities to exclude cash flows for taxation when measuring fair value This aligns the fair value measurement in IAS 41 with the requirements of IFRS 13 Fair Value Measurement to use internally consistent cash flows and discount rates and enables preparers to determine whether to use pre-tax or post-tax cash flows and discount rates for the most appropriate fair value measurement
The amendment is applied prospectively ie for fair value measurements on or after the date an entity initially applies the amendment
The amendment is effective for annual periods beginning on or after 1 January 2022 with early application permitted
Commentary
IAS 830 requires entities to give known or reasonably estimable information relevant to assessing the possible impact that the application of any new or revised IFRS Standard will have on the entityrsquos financial statements in the period of initial application The regulatory requirements in the various jurisdictions may differ as to how detailed the disclosures need to be some regulators may require both qualitative and quantitative information to be disclosed whereas others may consider that qualitative information (eg key areas that may be affected by the new or revised IFRS Standard) suffices in many circumstances For this reason relevant regulatory guidance should also be taken into account in preparing the disclosure
This applies to all new or revised IFRS Standards that have been issued but are not yet effective
IAS 1112(a) IAS 1119 - 121
3 Significant accounting policies
Commentary
The following are examples of the types of accounting policies that might be disclosed in this entityrsquos financial statements Entities are required to disclose in the summary of significant accounting policies the measurement basis (or bases) used in preparing the financial statements and the other accounting policies used that are relevant to an understanding of the financial statements An accounting policy may be significant because of the nature of the entityrsquos operations even if amounts for the current and prior periods are not material
In deciding whether a particular accounting policy should be disclosed management considers whether disclosure would assist users in understanding how transactions other events and conditions are reflected in the reported financial performance and financial position Disclosure of particular accounting policies is especially useful to users when those policies are selected from alternatives allowed in Standards and Interpretations
Each entity considers the nature of its operations and the policies that users of its financial statements would expect to be disclosed for that type of entity It is also appropriate to disclose each significant accounting policy that is not specifically required by IFRS Standards but that is selected and applied in accordance with IAS 8
For completeness in these Model Financial Statements accounting policies have been provided for some immaterial items although this is not required under IFRS Standards In general immaterial and irrelevant policies should be omitted]
30
International GAAP Holdings Limited
Australian entities may wish to include an additional accounting policy in respectof goods and services tax (GST) See Note 3 in Appendix 2 for example wording
Source International GAAP Holdings Limited
IAS 1117(a) IAS 116
Basis of accounting
The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS Standards) [The financial statements have also been prepared in accordance with IFRS Standards adopted by the European Union and therefore the Group financial statements comply with Article 4 of the EU IAS Regulation]
Commentary
The above statement should be tailored to be specific to the entity
Most jurisdictions have a mechanism for incorporating IFRS Standards into their financial reporting system These mechanisms range from direct adoption of IFRS Standards as issued by the IASB through adopting local standards that are equivalent to IFRS Standards to the extensive endorsement mechanism used in the European Union
IAS 1117(b) IAS 1112(a) IAS 117(b)
The financial statements have been prepared on the historical cost basis except for the revaluation of certain properties and financial instruments that are measured at revalued amounts or fair values at the end of each reporting period as explained in the accounting policies below Historical cost is generally based on the fair value of the consideration given in exchange for goods and services
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date regardless of whether that price is directly observable or estimated using another valuation technique In estimating the fair value of an asset or a liability the Group takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date Fair value for measurement andor disclosure purposes in these consolidated financial statements is determined on such a basis except for share-based payment transactions that are within the scope of IFRS 2 leasing transactions that are within the scope of IFRS 16 and measurements that have some similarities to fair value but are not fair value such as net realisable value in IAS 2 or value in use in IAS 36
The principal accounting policies adopted are set out below
IAS 125 Going concern
The directors have at the time of approving the financial statements a reasonable expectation that the Group have adequate resources to continue in operational existence for the foreseeable future Thus they continue to adopt the going concern basis of accounting in preparing the financial statements
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries) made up to 31 December each year Control is achieved when the Company
bull has the power over the investee
bull is exposed or has rights to variable returns from its involvement with the investee and
bull has the ability to use its power to affects its returns
The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control listed above
When the Company has less than a majority of the voting rights of an investee it considers that it has power over the investee when the voting rights are sufficient to give it the practical ability to direct the relevant activities of the investee unilaterally The Company considers all relevant facts and circumstances in assessing whether or not the Companyrsquos voting rights in an investee are sufficient to give it power including
bull the size of the Companyrsquos holding of voting rights relative to the size and dispersion of holdings of the other vote holders
bull potential voting rights held by the Company other vote holders or other parties
bull rights arising from other contractual arrangements and
This symbol indicates that this area of the model financial statements may be impacted by the effects of climate change Please see the table in Appendix 1 to see how this area may be affected For areas affected by the effects of climate change it would be expected that the entity discusses in its disclosures how the area is affected
31
International GAAP Holdings Limited
Source International GAAP Holdings Limited
bull any additional facts and circumstances that indicate that the Company has or does not have the current ability to direct the relevant activities at the time that decisions need to be made including voting patterns at previous shareholdersrsquo meetings
Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary Specifically the results of subsidiaries acquired or disposed of during the year are included in profit or loss from the date the Company gains control until the date when the Company ceases to control the subsidiary
Where necessary adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with the Grouprsquos accounting policies
All intragroup assets and liabilities equity income expenses and cash flows relating to transactions between the members of the Group are eliminated on consolidation
Non-controlling interests in subsidiaries are identified separately from the Grouprsquos equity therein Those interests of non-controlling shareholders that are present ownership interests entitling their holders to a proportionate share of net assets upon liquidation may initially be measured at fair value or at the non-controlling interestsrsquo proportionate share of the fair value of the acquireersquos identifiable net assets The choice of measurement is made on an acquisition-by-acquisition basis Other non-controlling interests are initially measured at fair value Subsequent to acquisition the carrying amount of non-controlling interests is the amount of those interests at initial recognition plus the non-controlling interestsrsquo share of subsequent changes in equity
Profit or loss and each component of other comprehensive income are attributed to the owners of the Company and to the non-controlling interests Total comprehensive income of the subsidiaries is attributed to the owners of the Company and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance
Changes in the Grouprsquos interests in subsidiaries that do not result in a loss of control are accounted for as equity transactions The carrying amount of the Grouprsquos interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to the owners of the Company
When the Group loses control of a subsidiary the gain or loss on disposal recognised in profit or loss is calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets (including goodwill) less liabilities of the subsidiary and any non-controlling interests All amounts previously recognised in other comprehensive income in relation to that subsidiary are accounted for as if the Group had directly disposed of the related assets or liabilities of the subsidiary (ie reclassified to profit or loss or transferred to another category of equity as requiredpermitted by applicable IFRS Standards) The fair value of any investment retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under IFRS 9 when applicable or the cost on initial recognition of an investment in an associate or a joint venture
Business combinations
Acquisitions of businesses are accounted for using the acquisition method The consideration transferred in a business combination is measured at fair value which is calculated as the sum of the acquisition-date fair values of assets transferred by the Group liabilities incurred by the Group to the former owners of the acquiree and the equity interest issued by the Group in exchange for control of the acquiree Acquisition-related costs are recognised in profit or loss as incurred
At the acquisition date the identifiable assets acquired and the liabilities assumed are recognised at their fair value at the acquisition date except that
bull deferred tax assets or liabilities and assets or liabilities related to employee benefit arrangements are recognised and measured in accordance with IAS 12 and IAS 19 respectively
bull liabilities or equity instruments related to share-based payment arrangements of the acquiree or share-based payment arrangements of the Group entered into to replace share-based payment arrangements of the acquiree are measured in accordance with IFRS 2 at the acquisition date (see below) and
bull assets (or disposal groups) that are classified as held for sale in accordance with IFRS 5 are measured in accordance with that Standard
32
International GAAP Holdings Limited
Source International GAAP Holdings Limited
Goodwill is measured as the excess of the sum of the consideration transferred the amount of any non-controlling interests in the acquiree and the fair value of the acquirerrsquos previously held equity interest in the acquiree (if any) over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed If after reassessment the net of the acquisition-date amounts of the identifiable assets acquired and liabilities assumed exceeds the sum of the consideration transferred the amount of any non-controlling interests in the acquiree and the fair value of the acquirerrsquos previously held interest in the acquiree (if any) the excess is recognised immediately in profit or loss as a bargain purchase gain
When the consideration transferred by the Group in a business combination includes a contingent consideration arrangement the contingent consideration is measured at its acquisition-date fair value and included as part of the consideration transferred in a business combination Changes in fair value of the contingent consideration that qualify as measurement period adjustments are adjusted retrospectively with corresponding adjustments against goodwill Measurement period adjustments are adjustments that arise from additional information obtained during the lsquomeasurement periodrsquo (which cannot exceed one year from the acquisition date) about facts and circumstances that existed at the acquisition date
The subsequent accounting for changes in the fair value of the contingent consideration that do not qualify as measurement period adjustments depends on how the contingent consideration is classified Contingent consideration that is classified as equity is not remeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity Other contingent consideration is remeasured to fair value at subsequent reporting dates with changes in fair value recognised in profit or loss
When a business combination is achieved in stages the Grouprsquos previously held interests (including joint operations) in the acquired entity are remeasured to its acquisition-date fair value and the resulting gain or loss if any is recognised in profit or loss Amounts arising from interests in the acquiree prior to the acquisition date that have previously been recognised in other comprehensive income are reclassified to profit or loss where such treatment would be appropriate if that interest were disposed of
If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs the Group reports provisional amounts for the items for which the accounting is incomplete Those provisional amounts are adjusted during the measurement period (see above) or additional assets or liabilities are recognised to reflect new information obtained about facts and circumstances that existed as of the acquisition date that if known would have affected the amounts recognised as of that date
Goodwill
Goodwill is initially recognised and measured as set out above
Goodwill is not amortised but is reviewed for impairment at least annually For the purpose of impairment testing goodwill is allocated to each of the Grouprsquos cash-generating units (or groups of cash-generating units) expected to benefit from the synergies of the combination Cash-generating units to which goodwill has been allocated are tested for impairment annually or more frequently when there is an indication that the unit may be impaired If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit An impairment loss recognised for goodwill is not reversed in a subsequent period
On disposal of a cash-generating unit the attributable amount of goodwill is included in the determination of the profit or loss on disposal
The Grouprsquos policy for goodwill arising on the acquisition of an associate is described below
Investments in associates and joint ventures
An associate is an entity over which the Group has significant influence and that is neither a subsidiary nor an interest in a joint venture Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies
A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint arrangement Joint control is the contractually agreed sharing of control of an arrangement which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control
33
International GAAP Holdings Limited
Source International GAAP Holdings Limited
The results and assets and liabilities of associates or joint ventures are incorporated in these financial statements using the equity method of accounting except when the investment is classified as held for sale in which case it is accounted for in accordance with IFRS 5
Under the equity method an investment in an associate or a joint venture is recognised initially in the consolidated statement of financial position at cost and adjusted thereafter to recognise the Grouprsquos share of the profit or loss and other comprehensive income of the associate or joint venture When the Grouprsquos share of losses of an associate or a joint venture exceeds the Grouprsquos interest in that associate or joint venture (which includes any long-term interests that in substance form part of the Grouprsquos net investment in the associate or joint venture) the Group discontinues recognising its share of further losses Additional losses are recognised only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate or joint venture
An investment in an associate or a joint venture is accounted for using the equity method from the date on which the investee becomes an associate or a joint venture On acquisition of the investment in an associate or a joint venture any excess of the cost of the investment over the Grouprsquos share of the net fair value of the identifiable assets and liabilities of the investee is recognised as goodwill which is included within the carrying amount of the investment Any excess of the Grouprsquos share of the net fair value of the identifiable assets and liabilities over the cost of the investment after reassessment is recognised immediately in profit or loss in the period in which the investment is acquired
The requirements of IAS 36 are applied to determine whether it is necessary to recognise any impairment loss with respect to the Grouprsquos investment in an associate or a joint venture When necessary the entire carrying amount of the investment (including goodwill) is tested for impairment in accordance with IAS 36 as a single asset by comparing its recoverable amount (higher of value in use and fair value less costs of disposal) with its carrying amount Any impairment loss recognised is not allocated to any asset including goodwill that forms part of the carrying amount of the investment Any reversal of that impairment loss is recognised in accordance with IAS 36 to the extent that the recoverable amount of the investment subsequently increases
The Group discontinues the use of the equity method from the date when the investment ceases to be an associate or a joint venture When the Group retains an interest in the former associate or a joint venture and the retained interest is a financial asset the Group measures the retained interest at fair value at that date and the fair value is regarded as its fair value on initial recognition in accordance with IFRS 9 The difference between the carrying amount of the associate or a joint venture at the date the equity method was discontinued and the fair value of any retained interest and any proceeds from disposing of a part interest in the associate or a joint venture is included in the determination of the gain or loss on disposal of the associate or joint venture In addition the Group accounts for all amounts previously recognised in other comprehensive income in relation to that associate on the same basis as would be required if that associate had directly disposed of the related assets or liabilities Therefore if a gain or loss previously recognised in other comprehensive income by that associate or joint venture would be reclassified to profit or loss on the disposal of the related assets or liabilities the Group reclassifies the gain or loss from equity to profit or loss (as a reclassification adjustment) when the associate or joint venture is disposed of
When the Group reduces its ownership interest in an associate or a joint venture but the Group continues to use the equity method the Group reclassifies to profit or loss the proportion of the gain or loss that had previously been recognised in other comprehensive income relating to that reduction in ownership interest if that gain or loss would be reclassified to profit or loss on the disposal of the related assets or liabilities
When a Group entity transacts with an associate or a joint venture of the Group profits and losses resulting from the transactions with the associate or joint venture are recognised in the Grouprsquos consolidated financial statements only to the extent of interests in the associate or joint venture that are not related to the Group
The Group applies IFRS 9 including the impairment requirements to long-term interests in an associate or joint venture to which the equity method is not applied and which form part of the net investment in the investee Furthermore in applying IFRS 9 to long-term interests the Group does not take into account adjustments to their carrying amount required by IAS 28 (ie adjustments to the carrying amount of long-term interests arising from the allocation of losses of the investee or assessment of impairment in accordance with IAS 28)
34
International GAAP Holdings Limited
Source International GAAP Holdings Limited
Interests in joint operations
A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets and obligations for the liabilities relating to the arrangement Joint control is the contractually agreed sharing of control of an arrangement which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control
When a Group entity undertakes its activities under joint operations the Group as a joint operator recognises in relation to its interest in a joint operation
bull its assets including its share of any assets held jointly
bull its liabilities including its share of any liabilities incurred jointly
bull its revenue from the sale of its share of the output arising from the joint operation
bull its share of the revenue from the sale of the output by the joint operation and
bull its expenses including its share of any expenses incurred jointly
The Group accounts for the assets liabilities revenue and expenses relating to its interest in a joint operation in accordance with the IFRS Standards applicable to the particular assets liabilities revenue and expenses
When a Group entity transacts with a joint operation in which a Group entity is a joint operator (such as a sale or contribution of assets) the Group is considered to be conducting the transaction with the other parties to the joint operation and gains and losses resulting from the transactions are recognised in the Grouprsquos consolidated financial statements only to the extent of other partiesrsquo interests in the joint operation
When a Group entity transacts with a joint operation in which a Group entity is a joint operator (such as a purchase of assets) the Group does not recognise its share of the gains and losses until it resells those assets to a third party
Non‑current assets held for sale
Non-current assets (and disposal groups) classified as held for sale are measured at the lower of carrying amount and fair value less costs to sell
Non-current assets and disposal groups are classified as held for sale if their carrying amount will be recovered through a sale transaction rather than through continuing use This condition is regarded as met only when the sale is highly probable and the asset (or disposal group) is available for immediate sale in its present condition Management must be committed to the sale which should be expected to qualify for recognition as a completed sale within one year from the date of classification
When the Group is committed to a sale plan involving loss of control of a subsidiary all of the assets and liabilities of that subsidiary are classified as held for sale when the criteria described above are met regardless of whether the Group will retain a non-controlling interest in its former subsidiary after the sale
When the Group is committed to a sale plan involving disposal of an investment in an associate or a portion of an investment in an associate the investment or the portion of the investment in the associate that will be disposed of is classified as held for sale when the criteria described above are met The Group then ceases to apply the equity method in relation to the portion that is classified as held for sale Any retained portion of an investment in an associate that has not been classified as held for sale continues to be accounted for using the equity method
Revenue recognition
The Group recognises revenue from the following major sources
bull sale of leisure goods and electronic equipment including the related loyalty programme lsquoMaxi-Points Schemersquo as disclosed in note 61 maintenance included in the price of products sold as well as warranties granted under local legislation as disclosed in note 40
bull installation of computer software for specialised business applications and
bull construction of residential properties
35
International GAAP Holdings Limited
Source International GAAP Holdings Limited
IFRS 1531 IFRS 1546 IFRS 1547 IFRS 15119
Revenue is measured based on the consideration to which the Group expects to be entitled in a contract with a customer and excludes amounts collected on behalf of third parties The Group recognises revenue when it transfers control of a product or service to a customer
IFRS 15119(e) IFRS 15B30
IFRS 15125
IFRS15108 IFRS 15125
IFRS 15125
IFRS 1555 IFRS 15119(d) IFRS 15126(b) IFRS 15126(d) IFRS 15B21
Sale of leisure goods
The Group sells sport shoes sport equipment and outdoor play equipment both to the wholesale market and directly to customers through its own retail outlets Sales-related warranties associated with leisure goods cannot be purchased separately and they serve as an assurance that the products sold comply with agreed-upon specifications Accordingly the Group accounts for warranties in accordance with IAS 37 (see note 40)
For sales of leisure goods to the wholesale market revenue is recognised when control of the goods has transferred being when the goods have been shipped to the wholesalerrsquos specific location (delivery) Following delivery the wholesaler has full discretion over the manner of distribution and price to sell the goods has the primary responsibility when onselling the goods and bears the risks of obsolescence and loss in relation to the goods A receivable is recognised by the Group when the goods are delivered to the wholesaler as this represents the point in time at which the right to consideration becomes unconditional as only the passage of time is required before payment is due
For sales of goods to retail customers revenue is recognised when control of the goods has transferred being at the point the customer purchases the goods at the retail outlet Payment of the transaction price is due immediately at the point the customer purchases the goods
Under the Grouprsquos standard contract terms customers have a right of return within 30 days At the point of sale a refund liability and a corresponding adjustment to revenue is recognised for those products expected to be returned At the same time the Group has a right to recover the product when customers exercise their right of return so consequently recognises a right to returned goods asset and a corresponding adjustment to cost of sales The Group uses its accumulated historical experience to estimate the number of returns on a portfolio level using the expected value method It is considered highly probable that a significant reversal in the cumulative revenue recognised will not occur given the consistent level of returns over previous years
IFRS 1555 IFRS 15125 IFRS 15119(d) IFRS 15B21
IFRS 15106 IFRS 15117 IFRS 15125
Sale of electronic equipment
The Group sells electronic equipment to the wholesale market and directly to customers both through its own retail outlets and through internet sales
For sales of electronic equipment to the wholesale market and through retail outlets and internet sales revenue is recognised by the Group at a point in time in line with the policy outlined above for the sale of leisure goods For sales to retail customers (from both retail outlet and internet sales) there exists the same 30-day right of return and accordingly a refund liability and a right to returned goods asset are recognised in relation to electronic equipment expected to be returned
For internet sales revenue is recognised when control of the goods has transferred to the customer being at the point the goods are delivered to the customer Delivery occurs when the goods have been shipped to the customerrsquos specific location When the customer initially purchases the goods online the transaction price received by the Group is recognised as a contract liability until the goods have been delivered to the customer
IFRS 15B39 IFRS 15B40
IFRS 1574 IFRS 15106 IFRS 15117 IFRS 15B42
lsquoMaxi-Pointsrsquo customer loyalty programme
The Group operates a lsquoMaxi-Pointsrsquo loyalty programme through which retail customers accumulate points on purchases of leisure goods and electronic equipment that entitle them to discounts on future purchases These points provide a discount to customers that they would not receive without purchasing the leisure goods or electronic equipment (ie a material right) The promise to provide the discount to the customer is therefore a separate performance obligation
The transaction price is allocated between the product the maintenance services (if the product is electronic equipment as described below) and the points on a relative stand-alone selling price basis The stand-alone selling price per point is estimated based on the discount to be given when the points are redeemed by the customer and the likelihood of redemption as evidenced by the Grouprsquos historical experience A contract liability is recognised for revenue relating to the loyalty points at the time of the initial sales transaction Revenue from the loyalty points is recognised when the points are redeemed by the customer Revenue for points that are not expected to be redeemed is recognised in proportion to the pattern of rights exercised by customers
36
International GAAP Holdings Limited
Source International GAAP Holdings Limited
IFRS 15B41
IFRS 1527 IFRS 1574 IFRS 1581 IFRS 15126 (c) IFRS 15B29
IFRS 1535(a) IFRS 15123(a) IFRS 15124 IFRS 15106 IFRS 15117
Maintenance relating to electronic equipment
Included in the transaction price for the sale of electronic equipment is an after-sales service This service relates to maintenance work that may be required to be carried out on the equipment for a three-year period after sale This period can then be extended if the customer requires additional years of maintenance services The renewal of services after the three-year period will be for the price at which these are sold by the Group to all of its customers as at the date of renewal regardless of the existence of a renewal option Consequently the option to extend the renewal period does not provide customers with any advantage when they enter into the initial contract and therefore no revenue has been deferred relating to this renewal option
The maintenance service is considered to be a distinct service as it is both regularly supplied by the Group to other customers on a stand-alone basis and is available for customers from other providers in the market A portion of the transaction price is therefore allocated to the maintenance services based on the stand-alone selling price of those services Discounts are not considered as they are only given in rare circumstances and are never material
Revenue relating to the maintenance services is recognised over time The transaction price allocated to these services is recognised as a contract liability at the time of the initial sales transaction and is released on a straight-line basis over the period of service (ie three years when the services are purchased together with the underlying equipment)
IFRS 1535(b) IFRS 15124 IFRS 15107 IFRS 15117
Installation of software services
The Group provides a service of installation of various software products for specialised business operations Such services are recognised as a performance obligation satisfied over time Revenue is recognised for these installation services based on the stage of completion of the contract The directors have assessed that the stage of completion determined as the proportion of the total time expected to install that has elapsed at the end of the reporting period is an appropriate measure of progress towards complete satisfaction of these performance obligations under IFRS 15 Payment for installation of software services is not due from the customer until the installation services are complete and therefore a contract asset is recognised over the period in which the installation services are performed representing the entityrsquos right to consideration for the services performed to date
IFRS 1535(c) IFRS 15124
IFRS 15117 IFRS 15106 IFRS 15107 IFRS 15126
Construction of residential properties
The Group constructs and sells residential properties under long-term contracts with customers Such contracts are entered into before construction of the residential properties begins Under the terms of the contracts the Group is contractually restricted from redirecting the properties to another customer and has an enforceable right to payment for work done Revenue from construction of residential properties is therefore recognised over time on a cost-to-cost method ie based on the proportion of contract costs incurred for work performed to date relative to the estimated total contract costs The directors consider that this input method is an appropriate measure of the progress towards complete satisfaction of these performance obligations under IFRS 15
The Group becomes entitled to invoice customers for construction of residential properties based on achieving a series of performance-related milestones When a particular milestone is reached the customer is sent a relevant statement of work signed by a third party assessor and an invoice for the related milestone payment The Group will previously have recognised a contract asset for any work performed Any amount previously recognised as a contract asset is reclassified to trade receivables at the point at which it is invoiced to the customer If the milestone payment exceeds the revenue recognised to date under the cost-to-cost method then the Group recognises a contract liability for the difference There is not considered to be a significant financing component in construction contracts with customers as the period between the recognition of revenue under the cost-to-cost method and the milestone payment is always less than one year
37
International GAAP Holdings Limited
Source International GAAP Holdings Limited
Leases
IFRS 1651
IFRS 165 IFRS 166 IFRS 169 IFRS 1660
IFRS1626
IFRS 1627
IFRS 1647
IFRS 1639
IFRS 1640(a)
IFRS 1642
IFRS 1645(c)
IFRS 1624 IFRS 1630
(a) The Group as lessee
The Group assesses whether a contract is or contains a lease at inception of the contract The Group recognises a right-of-use asset and a corresponding lease liability with respect to all lease arrangements in which it is the lessee except for short-term leases (defined as leases with a lease term of 12 months or less) and leases of low value assets (such as tablets and personal computers small items of office furniture and telephones) For these leases the Group recognises the lease payments as an operating expense on a straight-line basis over the term of the lease unless another systematic basis is more representative of the time pattern in which economic benefits from the leased assets are consumed
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date discounted by using the rate implicit in the lease If this rate cannot be readily determined the Group uses its incremental borrowing rate
Lease payments included in the measurement of the lease liability comprise
bull Fixed lease payments (including in-substance fixed payments) less any lease incentives receivable
bull Variable lease payments that depend on an index or rate initially measured using the index or rate at the commencement date
bull The amount expected to be payable by the lessee under residual value guarantees
bull The exercise price of purchase options if the lessee is reasonably certain to exercise the options and
bull Payments of penalties for terminating the lease if the lease term reflects the exercise of an option to terminate the lease
The lease liability is presented as a separate line in the consolidated statement of financial position
The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease liability (using the effective interest method) and by reducing the carrying amount to reflect the lease payments made
The Group remeasures the lease liability (and makes a corresponding adjustment to the related right-of-use asset) whenever
bull The lease term has changed or there is a significant event or change in circumstances resulting in a change in the assessment of exercise of a purchase option in which case the lease liability is remeasured by discounting the revised lease payments using a revised discount rate
bull The lease payments change due to changes in an index or rate or a change in expected payment under a guaranteed residual value in which cases the lease liability is remeasured by discounting the revised lease payments using an unchanged discount rate (unless the lease payments change is due to a change in a floating interest rate in which case a revised discount rate is used)
bull A lease contract is modified and the lease modification is not accounted for as a separate lease in which case the lease liability is remeasured based on the lease term of the modified lease by discounting the revised lease payments using a revised discount rate at the effective date of the modification
The Group did not make any such adjustments during the periods presented
The right-of-use assets comprise the initial measurement of the corresponding lease liability lease payments made at or before the commencement day less any lease incentives received and any initial direct costs They are subsequently measured at cost less accumulated depreciation and impairment losses
Whenever the Group incurs an obligation for costs to dismantle and remove a leased asset restore the site on which it is located or restore the underlying asset to the condition required by the terms and conditions of the lease a provision is recognised and measured under IAS 37 To the extent that the costs relate to a right-of-use asset the costs are included in the related right-of-use asset unless those costs are incurred to produce inventories
38
International GAAP Holdings Limited
Source International GAAP Holdings Limited
IFRS 1632
IFRS 1647
IFRS 1638
IFRS 1612 IFRS 1615
Right-of-use assets are depreciated over the shorter period of lease term and useful life of the right-of-use asset If a lease transfers ownership of the underlying asset or the cost of the right-of-use asset reflects that the Group expects to exercise a purchase option the related right-of-use asset is depreciated over the useful life of the underlying asset The depreciation starts at the commencement date of the lease
The right-of-use assets are presented as a separate line in the consolidated statement of financial position
The Group applies IAS 36 to determine whether a right-of-use asset is impaired and accounts for any identified impairment loss as described in the lsquoProperty Plant and Equipmentrsquo policy
Variable rents that do not depend on an index or rate are not included in the measurement the lease liability and the right-of-use asset The related payments are recognised as an expense in the period in which the event or condition that triggers those payments occurs and are included in the line ldquoOther expensesrdquo in profit or loss (see note 31)
As a practical expedient IFRS 16 permits a lessee not to separate non-lease components and instead account for any lease and associated non-lease components as a single arrangement The Group has not used this practical expedient For a contracts that contain a lease component and one or more additional lease or non-lease components the Group allocates the consideration in the contract to each lease component on the basis of the relative stand-alone price of the lease component and the aggregate stand-alone price of the non-lease components
IFRS 1689
IFRS 1661 IFRS 1662
IFRS 16B58
IFRS 1681 IFRS 1683
IFRS 1667 IFRS 1675
IFRS 1617
(b) The Group as lessor
The Group enters into lease agreements as a lessor with respect to some of its investment properties The Group also rents equipment to retailers necessary for the presentation and customer fitting and testing of footwear and equipment manufactured by the Group
Leases for which the Group is a lessor are classified as finance or operating leases Whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee the contract is classified as a finance lease All other leases are classified as operating leases
When the Group is an intermediate lessor it accounts for the head lease and the sub-lease as two separate contracts The sub-lease is classified as a finance or operating lease by reference to the right-of-use asset arising from the head lease
Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight-line basis over the lease term
Amounts due from lessees under finance leases are recognised as receivables at the amount of the Grouprsquos net investment in the leases Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the Grouprsquos net investment outstanding in respect of the leases
Subsequent to initial recognition the Group regularly reviews the estimated unguaranteed residual value and applies the impairment requirements of IFRS 9 recognising an allowance for expected credit losses on the lease receivables
Finance lease income is calculated with reference to the gross carrying amount of the lease receivables except for credit-impaired financial assets for which interest income is calculated with reference to their amortised cost (ie after a deduction of the loss allowance)
When a contract includes both lease and non-lease components the Group applies IFRS 15 to allocate the consideration under the contract to each component
Foreign currencies
In preparing the financial statements of the Group entities transactions in currencies other than the entityrsquos functional currency (foreign currencies) are recognised at the rates of exchange prevailing on the dates of the transactions At each reporting date monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing at that date Non-monetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated
39
International GAAP Holdings Limited
Source International GAAP Holdings Limited
Exchange differences are recognised in profit or loss in the period in which they arise except for
bull exchange differences on foreign currency borrowings relating to assets under construction for future productive use which are included in the cost of those assets when they are regarded as an adjustment to interest costs on those foreign currency borrowings
bull exchange differences on transactions entered into to hedge certain foreign currency risks (see below under financial instrumentshedge accounting) and
bull exchange differences on monetary items receivable from or payable to a foreign operation for which settlement is neither planned nor likely to occur in the foreseeable future (therefore forming part of the net investment in the foreign operation) which are recognised initially in other comprehensive income and reclassified from equity to profit or loss on disposal or partial disposal of the net investment
For the purpose of presenting consolidated financial statements the assets and liabilities of the Grouprsquos foreign operations are translated at exchange rates prevailing on the reporting date Income and expense items are translated at the average exchange rates for the period unless exchange rates fluctuate significantly during that period in which case the exchange rates at the date of transactions are used Exchange differences arising if any are recognised in other comprehensive income and accumulated in a foreign exchange translation reserve (attributed to non-controlling interests as appropriate)
On the disposal of a foreign operation (ie a disposal of the Grouprsquos entire interest in a foreign operation or a disposal involving loss of control over a subsidiary that includes a foreign operation or a partial disposal of an interest in a joint arrangement or an associate that includes a foreign operation of which the retained interest becomes a financial asset) all of the exchange differences accumulated in a foreign exchange translation reserve in respect of that operation attributable to the owners of the Company are reclassified to profit or loss
In addition in relation to a partial disposal of a subsidiary that includes a foreign operation that does not result in the Group losing control over the subsidiary the proportionate share of accumulated exchange differences are re-attributed to non-controlling interests and are not recognised in profit or loss For all other partial disposals (ie partial disposals of associates or joint arrangements that do not result in the Group losing significant influence or joint control) the proportionate share of the accumulated exchange differences is reclassified to profit or loss
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate Exchange differences arising are recognised in other comprehensive income
Borrowing costs
Borrowing costs directly attributable to the acquisition construction or production of qualifying assets which are assets that necessarily take a substantial period of time to get ready for their intended use or sale are added to the cost of those assets until such time as the assets are substantially ready for their intended use or sale
To the extent that variable rate borrowings are used to finance a qualifying asset and are hedged in an effective cash flow hedge of interest rate risk the effective portion of the derivative is recognised in other comprehensive income and reclassified to profit or loss when the qualifying asset impacts profit or loss To the extent that fixed rate borrowings are used to finance a qualifying asset and are hedged in an effective fair value hedge of interest rate risk the capitalised borrowing costs reflect the hedged interest rate
Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation
All other borrowing costs are recognised in profit or loss in the period in which they are incurred
IAS 2039(a) Government grants
Government grants are not recognised until there is reasonable assurance that the Group will comply with the conditions attaching to them and that the grants will be received
40
International GAAP Holdings Limited
Source International GAAP Holdings Limited
Government grants are recognised in profit or loss on a systematic basis over the periods in which the Group recognises as expenses the related costs for which the grants are intended to compensate Specifically government grants whose primary condition is that the Group should purchase construct or otherwise acquire non-current assets (including property plant and equipment) are recognised as deferred income in the consolidated statement of financial position and transferred to profit or loss on a systematic and rational basis over the useful lives of the related assets
Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Group with no future related costs are recognised in profit or loss in the period in which they become receivable
The benefit of a government loan at a below-market rate of interest is treated as a government grant measured as the difference between proceeds received and the fair value of the loan based on prevailing market interest rates
Commentary
Governments may be providing support to entities through programmes that do not result in recognition of income in the financial statements of the participating entities
For example certain governments are offering short‑term debt facilities sometimes in the form of commercial paper to support liquidity of entities that were financially sound before the COVID‑19 pandemic To the extent that the interest rate paid by the borrower and other terms of the debt instruments reflect market conditions the borrowing does not include a government grant that requires recognition in the financial statements Nevertheless such support is considered government assistance under IAS 20
Entities will need to consider if the significance of the benefit received is such that disclosure of the nature extent and duration of the assistance is necessary in order to avoid the financial statements from being misleading
Retirement and termination benefit costs
Payments to defined contribution retirement benefit plans are recognised as an expense when employees have rendered service entitling them to the contributions Payments made to state-managed retirement benefit plans are accounted for as payments to defined contribution plans where the Grouprsquos obligations under the plans are equivalent to those arising in a defined contribution retirement benefit plan
For defined benefit retirement benefit plans the cost of providing benefits is determined using the Projected Unit Credit Method with actuarial valuations being carried out at the end of each annual reporting period Remeasurements comprising actuarial gains and losses the effect of the asset ceiling (if applicable) and the return on plan assets (excluding interest) are recognised immediately in the statement of financial position with a charge or credit to other comprehensive income in the period in which they occur Remeasurements recognised in other comprehensive income are not reclassified Past service cost is recognised in profit or loss when the plan amendment or curtailment occurs or when the Group recognises related restructuring costs or termination benefits if earlier Gains or losses on settlement of a defined benefit plan are recognised when the settlement occurs Net interest is calculated by applying a discount rate to the net defined benefit liability or asset Defined benefit costs are split into three categories
bull service costs which includes current service cost past service cost and gains and losses on curtailments and settlements
bull net interest expense or income and
bull remeasurements
The Group recognises service costs within profit or loss as cost of sales and administrative expenses (see note 59)
Net interest expense or income is recognised within finance costs (see note 12)
The retirement benefit obligation recognised in the consolidated statement of financial position represents the deficit or surplus in the Grouprsquos defined benefit plans Any surplus resulting from this calculation is limited to the present value of any economic benefits available in the form of refunds from the plans or reductions in future contributions to the plans
41
International GAAP Holdings Limited
Source International GAAP Holdings Limited
[If applicable include alternative explanation about rights to refunds ndash The Trust Deed provides International GAAP Holdings Limited with an unconditional right to a refund of surplus assets assuming the full settlement of plan liabilities in the event of a plan wind-up Furthermore in the ordinary course of business the Trustee has no rights to unilaterally wind up or otherwise augment the benefits due to members of the plan Based on these rights any net surplus in the plan is recognised in full]
A liability for a termination benefit is recognised at the earlier of when the entity can no longer withdraw the offer of the termination benefit and when the entity recognises any related restructuring costs
Discretionary contributions made by employees or third parties reduce service cost upon payment of these contributions to the plan
When the formal terms of the plans specify that there will be contributions from employees or third parties the accounting depends on whether the contributions are linked to service as follows
bull If the contributions are not linked to services (eg contributions are required to reduce a deficit arising from losses on plan assets or from actuarial losses) they are reflected in the remeasurement of the net defined benefit liability (asset)
bull If contributions are linked to services they reduce service costs For the amount of contribution that is dependent on the number of years of service the entity reduces service cost by attributing the contributions to periods of service using the attribution method required by IAS 1970 for the gross benefits For the amount of contribution that is independent of the number of years of service the entity [reduces service cost in the period in which the related service is renderedreduces service cost by attributing contributions to the employeesrsquo periods of service in accordance with IAS 1970]
Short‑term and other long‑term employee benefits
A liability is recognised for benefits accruing to employees in respect of wages and salaries annual leave and sick leave in the period the related service is rendered at the undiscounted amount of the benefits expected to be paid in exchange for that service
Liabilities recognised in respect of short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in exchange for the related service
Liabilities recognised in respect of other long-term employee benefits are measured at the present value of the estimated future cash outflows expected to be made by the Group in respect of services provided by employees up to the reporting date
Taxation
The income tax expense represents the sum of the tax currently payable and deferred tax
Current tax
The tax currently payable is based on taxable profit for the year Taxable profit differs from net profit as reported in profit or loss because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible The Grouprsquos liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period
A provision is recognised for those matters for which the tax determination is uncertain but it is considered probable that there will be a future outflow of funds to a tax authority The provisions are measured at the best estimate of the amount expected to become payable The assessment is based on the judgement of tax professionals within the Company supported by previous experience in respect of such activities and in certain cases based on specialist independent tax advice
42
International GAAP Holdings Limited
Source International GAAP Holdings Limited
Deferred tax
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit and is accounted for using the liability method Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit In addition a deferred tax liability is not recognised if the temporary difference arises from the initial recognition of goodwill
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates and interests in joint ventures except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognised to the extent that it is probable that there will be sufficient taxable profits against which to utilise the benefits of the temporary differences and they are expected to reverse in the foreseeable future
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised based on tax laws and rates that have been enacted or substantively enacted at the reporting date
The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Group expects at the end of the reporting period to recover or settle the carrying amount of its assets and liabilities
For the purposes of measuring deferred tax liabilities and deferred tax assets for investment properties that are measured using the fair value model the carrying amounts of such properties are presumed to be recovered entirely through sale unless the presumption is rebutted The presumption is rebutted when the investment property is depreciable and is held within a business model whose objective is to consume substantially all of the economic benefits embodied in the investment property over time rather than through sale The directors reviewed the Groups investment property portfolios and concluded that none of the Groups investment properties are held under a business model whose objective is to consume substantially all of the economic benefits embodied in the investment properties over time rather than through sale Therefore the directors have determined that the lsquosalersquo presumption set out in the amendments to IAS 12 is not rebutted As a result the Group has not recognised any deferred taxes on changes in fair value of the investment properties as the Group is not subject to any income taxes on the fair value changes of the investment properties on disposal
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis
Current tax and deferred tax for the year
Current and deferred tax are recognised in profit or loss except when they relate to items that are recognised in other comprehensive income or directly in equity in which case the current and deferred tax are also recognised in other comprehensive income or directly in equity respectively Where current tax or deferred tax arises from the initial accounting for a business combination the tax effect is included in the accounting for the business combination
IAS 1673(a) - (c) Property plant and equipment
Land and buildings held for use in the production or supply of goods or services for rental to others (excluding investment properties) or for administrative purposes are stated in the statement of financial position at their revalued amounts being the fair value at the date of revaluation less any accumulated depreciation and accumulated impairment losses Revaluations are performed with sufficient regularity such that the carrying amount does not differ materially from that which would be determined using fair values at the reporting date
43
International GAAP Holdings Limited
Source International GAAP Holdings Limited
Any revaluation increase arising on the revaluation of such land and buildings is credited to the properties revaluation reserve except to the extent that it reverses a revaluation decrease for the same asset previously recognised as an expense in which case the increase is credited to profit or loss to the extent of the decrease previously expensed A decrease in carrying amount arising on the revaluation of such land and buildings is charged as an expense to the extent that it exceeds the balance if any held in the properties revaluation reserve relating to a previous revaluation of that asset
Depreciation on revalued buildings is recognised in profit or loss On the subsequent sale or retirement of a revalued property the attributable revaluation surplus remaining in the properties revaluation reserve is transferred directly to retained earnings
Properties in the course of construction for production supply or administrative purposes or for purposes not yet determined are carried at cost less any recognised impairment loss Cost includes professional fees and for qualifying assets borrowing costs capitalised in accordance with the Grouprsquos accounting policy Depreciation of these assets determined on the same basis as other property assets commences when the assets are ready for their intended use
Freehold land is not depreciated
Plant machinery fixtures and fittings are stated at cost less accumulated depreciation and accumulated impairment loss
Depreciation is recognised so as to write off the cost or valuation of assets (other than freehold land and properties under construction) less their residual values over their useful lives using the straight-line method on the following bases
Buildings 4 per cent per annum
Plant and machinery 10 per cent - 25 per cent per annum
Fixtures and fittings 10 per cent - 30 per cent per annum
The estimated useful lives residual values and depreciation method are reviewed at the end of each reporting period with the effect of any changes in estimate accounted for on a prospective basis
Right-of-use assets are depreciated over the shorter period of the lease term and the useful life of the underlying asset If a lease transfers ownership of the underlying asset or the cost of the right-of-use asset reflects that the Group expects to exercise a purchase option the related right-of-use asset is depreciated over the useful life of the underlying asset
An item of property plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in profit or loss
Commentary
Provide additional explanation if the Group has elected to use fair value or a previous revaluation as deemed cost on transition to IFRS Standards
IAS 4075(a) Investment property
Investment property which is property held to earn rentals andor for capital appreciation (including property under construction for such purposes) is measured initially at cost including transaction costs Subsequent to initial recognition investment property is measured at fair value Gains or losses arising from changes in the fair value of investment property are included in profit or loss in the period in which they arise
An investment property is derecognised upon disposal or when the investment property is permanently withdrawn from use and no future economic benefits are expected from the disposal Any gain or loss arising on derecognition of the property (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the period in which the property is derecognised
44
International GAAP Holdings Limited
Source International GAAP Holdings Limited
Commentary
A Group that elects to use the cost model for investment property (not illustrated in these Model Financial Statements) should disclose an appropriate policy and make reference if relevant to the use of the elections to use fair value or previous revaluations as deemed cost on transition
IAS 38118(a) Intangible assets acquired separately
Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortisation and accumulated impairment losses Amortisation is recognised on a straight-line basis over their estimated useful lives which are disclosed in note 18 The estimated useful life and amortisation method are reviewed at the end of each reporting period with the effect of any changes in estimate being accounted for on a prospective basis Intangible assets with indefinite useful lives that are acquired separately are carried at cost less accumulated impairment losses
IAS 38118(b) Internally‑generated intangible assets ndash research and development expenditure
Expenditure on research activities is recognised as an expense in the period in which it is incurred
An internally-generated intangible asset arising from development (or from the development phase of an internal project) is recognised if and only if all of the following conditions have been demonstrated
bull the technical feasibility of completing the intangible asset so that it will be available for use or sale
bull the intention to complete the intangible asset and use or sell it
bull the ability to use or sell the intangible asset
bull how the intangible asset will generate probable future economic benefits
bull the availability of adequate technical financial and other resources to complete the development and to use or sell the intangible asset and
bull the ability to measure reliably the expenditure attributable to the intangible asset during its development
The amount initially recognised for internally-generated intangible assets is the sum of the expenditure incurred from the date when the intangible asset first meets the recognition criteria listed above Where no internally-generated intangible asset can be recognised development expenditure is recognised in profit or loss in the period in which it is incurred
Subsequent to initial recognition internally-generated intangible assets are reported at cost less accumulated amortisation and accumulated impairment losses on the same basis as intangible assets that are acquired separately
IAS 38118(b) Intangible assets acquired in a business combination
Intangible assets acquired in a business combination and recognised separately from goodwill are recognised initially at their fair value at the acquisition date (which is regarded as their cost)
Subsequent to initial recognition intangible assets acquired in a business combination are reported at cost less accumulated amortisation and accumulated impairment losses on the same basis as intangible assets that are acquired separately
Derecognition of intangible assets
An intangible asset is derecognised on disposal or when no future economic benefits are expected from use or disposal Gains or losses arising from derecognition of an intangible asset measured as the difference between the net disposal proceeds and the carrying amount of the asset are recognised in profit or loss when the asset is derecognised
45
International GAAP Holdings Limited
Source International GAAP Holdings Limited
Patents and trademarks
Patents and trademarks are measured initially at purchase cost and are amortised on a straight-line basis over their estimated useful lives
Impairment of property plant and equipment and intangible assets excluding goodwill
At each reporting date the Group reviews the carrying amounts of its property plant and equipment and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss If any such indication exists the recoverable amount of the asset is estimated to determine the extent of the impairment loss (if any) Where the asset does not generate cash flows that are independent from other assets the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs When a reasonable and consistent basis of allocation can be identified corporate assets are also allocated to individual cash-generating units or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified
Intangible assets with an indefinite useful life are tested for impairment at least annually and whenever there is an indication at the end of a reporting period that the asset may be impaired
Recoverable amount is the higher of fair value less costs of disposal and value in use In assessing value in use the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount An impairment loss is recognised immediately in profit or loss unless the relevant asset is carried at a revalued amount in which case the impairment loss is treated as a revaluation decrease and to the extent that the impairment loss is greater than the related revaluation surplus the excess impairment loss is recognised in profit or loss
Where an impairment loss subsequently reverses the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years A reversal of an impairment loss is recognised immediately in profit or loss to the extent that it eliminates the impairment loss which has been recognised for the asset in prior years Any increase in excess of this amount is treated as a revaluation increase
IAS 236(a) Inventories
Inventories are stated at the lower of cost and net realisable value Cost comprises direct materials and where applicable direct labour costs and those overheads that have been incurred in bringing the inventories to their present location and condition Cost is calculated using the weighted average cost method Net realisable value represents the estimated selling price less all estimated costs of completion and costs to be incurred in marketing selling and distribution
IFRS 721 Financial instruments
Financial assets and financial liabilities are recognised in the Grouprsquos statement of financial position when the Group becomes a party to the contractual provisions of the instrument
Financial assets and financial liabilities are initially measured at fair value except for trade receivables that do not have a significant financing component which are measured at transaction price Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities as appropriate on initial recognition Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss
46
International GAAP Holdings Limited
Source International GAAP Holdings Limited
Financial assets
IFRS 7B5(c) All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace
All recognised financial assets are measured subsequently in their entirety at either amortised cost or fair value depending on the classification of the financial assets
Classification of financial assets
Debt instruments that meet the following conditions are measured subsequently at amortised cost
bull the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows and
bull the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding
Debt instruments that meet the following conditions are measured subsequently at fair value through other comprehensive income (FVTOCI)
bull the financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling the financial assets and
bull the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding
By default all other financial assets are measured subsequently at fair value through profit or loss (FVTPL)
Despite the foregoing the Group may make the following irrevocable election designation at initial recognition of a financial asset
bull the Group may irrevocably elect to present subsequent changes in fair value of an equity investment in other comprehensive income if certain criteria are met (see (iii) below) and
bull the Group may irrevocably designate a debt investment that meets the amortised cost or FVTOCI criteria as measured at FVTPL if doing so eliminates or significantly reduces an accounting mismatch (see (iv) below)
(i) Amortised cost and effective interest method
The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income over the relevant period
For financial assets other than purchased or originated credit-impaired financial assets (ie assets that are credit-impaired on initial recognition) the effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate transaction costs and other premiums or discounts) excluding expected credit losses through the expected life of the debt instrument or where appropriate a shorter period to the gross carrying amount of the debt instrument on initial recognition For purchased or originated credit-impaired financial assets a credit-adjusted effective interest rate is calculated by discounting the estimated future cash flows including expected credit losses to the amortised cost of the debt instrument on initial recognition
The amortised cost of a financial asset is the amount at which the financial asset is measured at initial recognition minus the principal repayments plus the cumulative amortisation using the effective interest method of any difference between that initial amount and the maturity amount adjusted for any loss allowance The gross carrying amount of a financial asset is the amortised cost of a financial asset before adjusting for any loss allowance
Interest income is recognised using the effective interest method for debt instruments measured subsequently at amortised cost and at FVTOCI For financial assets other than purchased or originated credit-impaired financial assets interest income is calculated by applying the effective interest rate to the gross carrying amount of a financial asset except for financial assets that have subsequently become credit-impaired (see below) For financial assets that have subsequently become credit-impaired interest income is recognised by applying the effective interest rate to the amortised cost of the financial asset If in subsequent reporting periods the credit risk on the credit-impaired financial instrument improves so that the financial asset is no longer credit-impaired interest
47
International GAAP Holdings Limited
Source International GAAP Holdings Limited
IFRS 7B5(e) income is recognised by applying the effective interest rate to the gross carrying amount of the financial asset
For purchased or originated credit-impaired financial assets the Group recognises interest income by applying the credit-adjusted effective interest rate to the amortised cost of the financial asset from initial recognition The calculation does not revert to the gross basis even if the credit risk of the financial asset subsequently improves so that the financial asset is no longer credit-impaired
Interest income is recognised in profit or loss and is included in the finance income - interest income line item (note 10)
(ii) Debt instruments classified as at FVTOCI
The corporate bonds held by the Group are classified as at FVTOCI Fair value is determined in the manner described in note 63(a)(i) The corporate bonds are initially measured at fair value plus transaction costs Subsequently changes in the carrying amount of these corporate bonds as a result of foreign exchange gains and losses (see below) impairment gains or losses (see below) and interest income calculated using the effective interest method (see (i) above) are recognised in profit or loss The amounts that are recognised in profit or loss are the same as the amounts that would have been recognised in profit or loss if these corporate bonds had been measured at amortised cost All other changes in the carrying amount of these corporate bonds are recognised in other comprehensive income and accumulated under the heading of investments revaluation reserve When these corporate bonds are derecognised the cumulative gains or losses previously recognised in other comprehensive income are reclassified to profit or loss
(iii) Equity instruments designated as at FVTOCI
On initial recognition the Group may make an irrevocable election (on an instrument-by-instrument basis) to designate investments in equity instruments as at FVTOCI Designation at FVTOCI is not permitted if the equity investment is held for trading or if it is contingent consideration recognised by an acquirer in a business combination
Investments in equity instruments at FVTOCI are initially measured at fair value plus transaction costs Subsequently they are measured at fair value with gains and losses arising from changes in fair value recognised in other comprehensive income and accumulated in the investments revaluation reserve The cumulative gain or loss is not reclassified to profit or loss on disposal of the equity investments instead it is transferred to retained earnings
Dividends on these investments in equity instruments are recognised in profit or loss in accordance with IFRS 9 unless the dividends clearly represent a recovery of part of the cost of the investment Dividends are included in the lsquofinance income - Otherrsquo line item (note 10) in profit or loss
The Group designated all investments in equity instruments that are not held for trading as at FVTOCI on initial recognition (see note 25)
A financial asset is held for trading if
bull it has been acquired principally for the purpose of selling it in the near term or
bull on initial recognition it is part of a portfolio of identified financial instruments that the Group manages together and has evidence of a recent actual pattern of short-term profit-taking or
bull it is a derivative (except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument)
(iv) Financial assets at FVTPL
Financial assets that do not meet the criteria for being measured at amortised cost or FVTOCI (see (i) to (iii) above) are measured at FVTPL Specifically
bull Investments in equity instruments are classified as at FVTPL unless the Group designates an equity investment that is neither held for trading nor a contingent consideration arising from a business combination as at FVTOCI on initial recognition (see (iii) above)
48
International GAAP Holdings Limited
Source International GAAP Holdings Limited
IFRS 7B5(e)
bull Debt instruments that do not meet the amortised cost criteria or the FVTOCI criteria (see (i) and (ii) above) are classified as at FVTPL In addition debt instruments that meet either the amortised cost criteria or the FVTOCI criteria may be designated as at FVTPL upon initial recognition if such designation eliminates or significantly reduces a measurement or recognition inconsistency (so called lsquoaccounting mismatchrsquo) that would arise from measuring assets or liabilities or recognising the gains and losses on them on different bases The Group has not designated any debt instruments as at FVTPL
Financial assets at FVTPL are measured at fair value at the end of each reporting period with any fair value gains or losses recognised in profit or loss to the extent they are not part of a designated hedging relationship (see hedge accounting policy) The net gain or loss recognised in profit or loss includes any dividend or interest earned on the financial asset and is included in the lsquoother gains and lossesrsquo line item (note 11) Fair value is determined in the manner described in note 63(a)(i)
IFRS 7B5(e)
Foreign exchange gains and losses
The carrying amount of financial assets that are denominated in a foreign currency is determined in that foreign currency and translated at the spot rate at the end of each reporting period Specifically
bull for financial assets measured at amortised cost that are not part of a designated hedging relationship exchange differences are recognised in profit or loss in the lsquoother gains and lossesrsquo line item (note 11)
bull for debt instruments measured at FVTOCI that are not part of a designated hedging relationship exchange differences on the amortised cost of the debt instrument are recognised in profit or loss in the lsquoother gains and lossesrsquo line item (note 11) As the foreign currency element recognised in profit or loss is the same as if it was measured at amortised cost the residual foreign currency element based on the translation of the carrying amount (at fair value) is recognised in other comprehensive income in the investments revaluation reserve
bull for financial assets measured at FVTPL that are not part of a designated hedging relationship exchange differences are recognised in profit or loss in the lsquoother gains and lossesrsquo line item as part of the fair value gain or loss (note 11) and
bull for equity instruments measured at FVTOCI exchange differences are recognised in other comprehensive income in the investments revaluation reserve
See hedge accounting policy regarding the recognition of exchange differences where the foreign currency risk component of a financial asset is designated as a hedging instrument for a hedge of foreign currency risk
IFRS 735F Impairment of financial assets
The Group recognises a loss allowance for expected credit losses on investments in debt instruments that are measured at amortised cost or at FVTOCI lease receivables trade receivables and contract assets as well as on financial guarantee contracts The amount of expected credit losses is updated at each reporting date to reflect changes in credit risk since initial recognition of the respective financial instrument
The Group always recognises lifetime expected credit losses (ECL) for trade receivables contract assets and lease receivables The expected credit losses on these financial assets are estimated using a provision matrix based on the Grouprsquos historical credit loss experience adjusted for factors that are specific to the debtors general economic conditions and an assessment of both the current as well as the forecast direction of conditions at the reporting date including time value of money where appropriate
For all other financial instruments the Group recognises lifetime ECL when there has been a significant increase in credit risk since initial recognition However if the credit risk on the financial instrument has not increased significantly since initial recognition the Group measures the loss allowance for that financial instrument at an amount equal to 12-month ECL
Lifetime ECL represents the expected credit losses that will result from all possible default events over the expected life of a financial instrument In contrast 12-month ECL represents the portion of lifetime ECL that is expected to result from default events on a financial instrument that are possible within 12 months after the reporting date
49
International GAAP Holdings Limited
Source International GAAP Holdings Limited
IFRS 735F(a) IFRS 735G(b)
IFRS 735F(a) IFRS 735G(a)(ii)
IFRS 735F(a)(i)
(i) Significant increase in credit risk
In assessing whether the credit risk on a financial instrument has increased significantly since initial recognition the Group compares the risk of a default occurring on the financial instrument at the reporting date with the risk of a default occurring on the financial instrument at the date of initial recognition In making this assessment the Group considers both quantitative and qualitative information that is reasonable and supportable including historical experience and forward-looking information that is available without undue cost or effort Forward-looking information considered includes the future prospects of the industries in which the Grouprsquos debtors operate obtained from economic expert reports financial analysts governmental bodies relevant think-tanks and other similar organisations as well as consideration of various external sources of actual and forecast economic information that relate to the Grouprsquos core operations
In particular the following information is taken into account when assessing whether credit risk has increased significantly since initial recognition
bull an actual or expected significant deterioration in the financial instrumentrsquos external (if available) or internal credit rating
bull significant deterioration in external market indicators of credit risk for a particular financial instrument eg a significant increase in the credit spread the credit default swap prices for the debtor or the length of time or the extent to which the fair value of a financial asset has been less than its amortised cost
bull existing or forecast adverse changes in business financial or economic conditions that are expected to cause a significant decrease in the debtorrsquos ability to meet its debt obligations
bull an actual or expected significant deterioration in the operating results of the debtor
bull significant increases in credit risk on other financial instruments of the same debtor and
bull an actual or expected significant adverse change in the regulatory economic or technological environment of the debtor that results in a significant decrease in the debtorrsquos ability to meet its debt obligations
Irrespective of the outcome of the above assessment the Group presumes that the credit risk on a financial asset has increased significantly since initial recognition when contractual payments are more than 30 days past due unless the Group has reasonable and supportable information that demonstrates otherwise
Despite the foregoing the Group assumes that the credit risk on a financial instrument has not increased significantly since initial recognition if the financial instrument is determined to have low credit risk at the reporting date A financial instrument is determined to have low credit risk if
1) the financial instrument has a low risk of default
2) the debtor has a strong capacity to meet its contractual cash flow obligations in the near term and
3) adverse changes in economic and business conditions in the longer term may but will not necessarily reduce the ability of the borrower to fulfil its contractual cash fvlow obligations
The Group considers a financial asset to have low credit risk when the asset has external credit rating of lsquoinvestment gradersquo in accordance with the globally understood definition or if an external rating is not available the asset has an internal rating of lsquoperformingrsquo Performing means that the counterparty has a strong financial position and there are no past due amounts
For financial guarantee contracts the date that the Group becomes a party to the irrevocable commitment is considered to be the date of initial recognition for the purposes of assessing the financial instrument for impairment In assessing whether there has been a significant increase in the credit risk since initial recognition of a financial guarantee contracts the Group considers the changes in the risk that the specified debtor will default on the contract
The Group regularly monitors the effectiveness of the criteria used to identify whether there has been a significant increase in credit risk and revises them as appropriate to ensure that the criteria are capable of identifying significant increase in credit risk before the amount becomes past due
50
International GAAP Holdings Limited
Source International GAAP Holdings Limited
IFRS 735F(b) (ii) Definition of default
The Group considers the following as constituting an event of default for internal credit risk management purposes as historical experience indicates that financial assets that meet either of the following criteria are generally not recoverable
bull when there is a breach of financial covenants by the debtor or
bull information developed internally or obtained from external sources indicates that the debtor is unlikely to pay its creditors including the Group in full (without taking into account any collateral held by the Group)
Irrespective of the above analysis the Group considers that default has occurred when a financial asset is more than 90 days past due unless the Group has reasonable and supportable information to demonstrate that a more lagging default criterion is more appropriate
IFRS 735F(d) IFRS 735G(a)(iii)
(iii) Credit-impaired financial assets
A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of that financial asset have occurred Evidence that a financial asset is credit-impaired includes observable data about the following events
a) significant financial difficulty of the issuer or the borrower
b) a breach of contract such as a default or past due event (see (ii) above)
c) the lender(s) of the borrower for economic or contractual reasons relating to the borrowerrsquos financial difficulty having granted to the borrower a concession(s) that the lender(s) would not otherwise consider
d) it is becoming probable that the borrower will enter bankruptcy or other financial reorganisation or
e) the disappearance of an active market for that financial asset because of financial difficulties
IFRS 735F(e) (iv) Write-off policy
The Group writes off a financial asset when there is information indicating that the debtor is in severe financial difficulty and there is no realistic prospect of recovery eg when the debtor has been placed under liquidation or has entered into bankruptcy proceedings or in the case of trade receivables when the amounts are over two years past due whichever occurs sooner Financial assets written off may still be subject to enforcement activities under the Grouprsquos recovery procedures taking into account legal advice where appropriate Any recoveries made are recognised in profit or loss
IFRS 735G(a) (v) Measurement and recognition of expected credit losses
The measurement of expected credit losses is a function of the probability of default loss given default (ie the magnitude of the loss if there is a default) and the exposure at default The assessment of the probability of default and loss given default is based on historical data adjusted by forward-looking information as described above As for the exposure at default for financial assets this is represented by the assetsrsquo gross carrying amount at the reporting date for financial guarantee contracts the exposure includes the amount drawn down as at the reporting date together with any additional amounts expected to be drawn down in the future by default date determined based on historical trend the Grouprsquos understanding of the specific future financing needs of the debtors and other relevant forward-looking information
For financial assets the expected credit loss is estimated as the difference between all contractual cash flows that are due to the Group in accordance with the contract and all the cash flows that the Group expects to receive discounted at the original effective interest rate For a lease receivable the cash flows used for determining the expected credit losses is consistent with the cash flows used in measuring the lease receivable in accordance with IFRS 16
For a financial guarantee contract as the Group is required to make payments only in the event of a default by the debtor in accordance with the terms of the instrument that is guaranteed the expected loss allowance is the expected payments to reimburse the holder for a credit loss that it incurs less any amounts that the Group expects to receive from the holder the debtor or any other party
51
International GAAP Holdings Limited
Source International GAAP Holdings Limited
If the Group has measured the loss allowance for a financial instrument at an amount equal to lifetime ECL in the previous reporting period but determines at the current reporting date that the conditions for lifetime ECL are no longer met the Group measures the loss allowance at an amount equal to 12-month ECL at the current reporting date except for assets for which the simplified approach was used
The Group recognises an impairment gain or loss in profit or loss for all financial instruments with a corresponding adjustment to their carrying amount through a loss allowance account except for investments in debt instruments that are measured at FVTOCI for which the loss allowance is recognised in other comprehensive income and accumulated in the investment revaluation reserve and does not reduce the carrying amount of the financial asset in the statement of financial position
Derecognition of financial assets
The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset the Group recognises its retained interest in the asset and an associated liability for amounts it may have to pay If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset the Group continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received
On derecognition of a financial asset measured at amortised cost the difference between the assetrsquos carrying amount and the sum of the consideration received and receivable is recognised in profit or loss In addition on derecognition of an investment in a debt instrument classified as at FVTOCI the cumulative gain or loss previously accumulated in the investments revaluation reserve is reclassified to profit or loss In contrast on derecognition of an investment in an equity instrument which the Group has elected on initial recognition to measure at FVTOCI the cumulative gain or loss previously accumulated in the investments revaluation reserve is not reclassified to profit or loss but is transferred to retained earnings
Financial liabilities and equity
Classification as debt or equity
Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities Equity instruments issued by the Group are recognised at the proceeds received net of direct issue costs
Repurchase of the Companyrsquos own equity instruments is recognised and deducted directly in equity No gain or loss is recognised in profit or loss on the purchase sale issue or cancellation of the Companyrsquos own equity instruments
Compound instruments
The component parts of convertible loan notes issued by the Group are classified separately as financial liabilities and equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument A conversion option that will be settled by the exchange of a fixed amount of cash or another financial asset for a fixed number of the Companyrsquos own equity instruments is an equity instrument
At the date of issue the fair value of the liability component is estimated using the prevailing market interest rate for a similar non-convertible instrument This amount is recorded as a liability on an amortised cost basis using the effective interest method until extinguished upon conversion or at the instrumentrsquos maturity date
The conversion option classified as equity is determined by deducting the amount of the liability component from the fair value of the compound instrument as a whole This is recognised and included in equity net of income tax effects and is not subsequently remeasured In addition the conversion option classified as equity will remain in equity until the conversion option is exercised in which case the balance recognised in equity will be transferred to [share premiumother equity [describe]] Where the conversion option remains unexercised at the maturity date of the convertible loan note the balance recognised in equity will be transferred to [retained earningsother equity [describe]] No gain or loss is recognised in profit or loss upon conversion or expiration of the conversion option
52
International GAAP Holdings Limited
Source International GAAP Holdings Limited
Transaction costs that relate to the issue of the convertible loan notes are allocated to the liability and equity components in proportion to the allocation of the gross proceeds Transaction costs relating to the equity component are recognised directly in equity Transaction costs relating to the liability component are included in the carrying amount of the liability component and are amortised over the lives of the convertible loan notes using the effective interest method
Financial liabilities
All financial liabilities are measured subsequently at amortised cost using the effective interest method or at FVTPL
However financial liabilities that arise when a transfer of a financial asset does not qualify for derecognition or when the continuing involvement approach applies and financial guarantee contracts issued by the Group are measured in accordance with the specific accounting policies set out below
IFRS 7B5(e)
Financial liabilities at FVTPL
Financial liabilities are classified as at FVTPL when the financial liability is (i) contingent consideration of an acquirer in a business combination (ii) held for trading or (iii) it is designated as at FVTPL
A financial liability is classified as held for trading if
bull it has been acquired principally for the purpose of repurchasing it in the near term or
bull on initial recognition it is part of a portfolio of identified financial instruments that the Group manages together and has a recent actual pattern of short-term profit-taking or
bull it is a derivative except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument
A financial liability other than a financial liability held for trading or contingent consideration of an acquirer in a business combination may be designated as at FVTPL upon initial recognition if
bull such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise or
bull the financial liability forms part of a group of financial assets or financial liabilities or both which is managed and its performance is evaluated on a fair value basis in accordance with the Grouprsquos documented risk management or investment strategy and information about the grouping is provided internally on that basis or
bull it forms part of a contract containing one or more embedded derivatives and IFRS 9 permits the entire combined contract to be designated as at FVTPL
Financial liabilities at FVTPL are measured at fair value with any gains or losses arising on changes in fair value recognised in profit or loss to the extent that they are not part of a designated hedging relationship (see Hedge accounting policy) The net gain or loss recognised in profit or loss incorporates any interest paid on the financial liability and is included in the lsquoother gains and lossesrsquo line item (note 11) in profit or loss
However for financial liabilities that are designated as at FVTPL the amount of change in the fair value of the financial liability that is attributable to changes in the credit risk of that liability is recognised in other comprehensive income unless the recognition of the effects of changes in the liabilityrsquos credit risk in other comprehensive income would create or enlarge an accounting mismatch in profit or loss The remaining amount of change in the fair value of liability is recognised in profit or loss Changes in fair value attributable to a financial liabilityrsquos credit risk that are recognised in other comprehensive income are not subsequently reclassified to profit or loss instead they are transferred to retained earnings upon derecognition of the financial liability
Gains or losses on financial guarantee contracts issued by the Group that are designated by the Group as at FVTPL are recognised in profit or loss
Fair value is determined in the manner described in note 63(a)(i)
Financial liabilities measured subsequently at amortised cost
Financial liabilities that are not (i) contingent consideration of an acquirer in a business combination (ii) held-for-trading or (iii) designated as at FVTPL are measured subsequently at amortised cost using the effective interest method
53
International GAAP Holdings Limited
Source International GAAP Holdings Limited
The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate transaction costs and other premiums or discounts) through the expected life of the financial liability or (where appropriate) a shorter period to the amortised cost of a financial liability
Financial guarantee contract liabilities
A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payments when due in accordance with the terms of a debt instrument
Financial guarantee contract liabilities are measured initially at their fair values and if not designated as at FVTPL and do not arise from a transfer of an asset are measured subsequently at the higher of
bull the amount of the loss allowance determined in accordance with IFRS 9 (see financial assets above) and
bull the amount recognised initially less where appropriate cumulative amortisation recognised in accordance with the revenue recognition policies set out above
Foreign exchange gains and losses
For financial liabilities that are denominated in a foreign currency and are measured at amortised cost at the end of each reporting period the foreign exchange gains and losses are determined based on the amortised cost of the instruments These foreign exchange gains and losses are recognised in the lsquoother gains and lossesrsquo line item in profit or loss (note 11) for financial liabilities that are not part of a designated hedging relationship For those which are designated as a hedging instrument for a hedge of foreign currency risk foreign exchange gains and losses are recognised in other comprehensive income and accumulated in a separate component of equity
The fair value of financial liabilities denominated in a foreign currency is determined in that foreign currency and translated at the spot rate at the end of the reporting period For financial liabilities that are measured as at FVTPL the foreign exchange component forms part of the fair value gains or losses and is recognised in profit or loss for financial liabilities that are not part of a designated hedging relationship
Derecognition of financial liabilities
The Group derecognises financial liabilities when and only when the Grouprsquos obligations are discharged cancelled or have expired The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in profit or loss
When the Group exchanges with the existing lender one debt instrument into another one with the substantially different terms such exchange is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability Similarly the Group accounts for substantial modification of terms of an existing liability or part of it as an extinguishment of the original financial liability and the recognition of a new liability It is assumed that the terms are substantially different if the discounted present value of the cash flows under the new terms including any fees paid net of any fees received and discounted using the original effective rate is at least 10 per cent different from the discounted present value of the remaining cash flows of the original financial liability If the modification is not substantial the difference between (1) the carrying amount of the liability before the modification and (2) the present value of the cash flows after modification is recognised in profit or loss as the modification gain or loss within other gains and losses
IFRS 721 Derivative financial instruments
The Group enters into a variety of derivative financial instruments to manage its exposure to interest rate and foreign exchange rate risks including foreign exchange forward contracts options and interest rate swaps Further details of derivative financial instruments are disclosed in notes 35 and 63(c)
Derivatives are recognised initially at fair value at the date a derivative contract is entered into and are subsequently remeasured to their fair value at each reporting date The resulting gain or loss is recognised in profit or loss immediately unless the derivative is designated and effective as a hedging instrument in which event the timing of the recognition in profit or loss depends on the nature of the hedge relationship
54
International GAAP Holdings Limited
Source International GAAP Holdings Limited
A derivative with a positive fair value is recognised as a financial asset whereas a derivative with a negative fair value is recognised as a financial liability Derivatives are not offset in the financial statements unless the Group has both a legally enforceable right and intention to offset The impact of the Master Netting Agreements on the Grouprsquos financial position is disclosed in note 35 A derivative is presented as a non-current asset or a non-current liability if the remaining maturity of the instrument is more than 12 months and it is not due to be realised or settled within 12 months Other derivatives are presented as current assets or current liabilities
Embedded derivatives
An embedded derivative is a component of a hybrid contract that also includes a non-derivative host ndash with the effect that some of the cash flows of the combined instrument vary in a way similar to a stand-alone derivative
Derivatives embedded in hybrid contracts with a financial asset host within the scope of IFRS 9 are not separated The entire hybrid contract is classified and subsequently measured as either amortised cost or fair value as appropriate
Derivatives embedded in hybrid contracts with hosts that are not financial assets within the scope of IFRS 9 (eg financial liabilities) are treated as separate derivatives when they meet the definition of a derivative their risks and characteristics are not closely related to those of the host contracts and the host contracts are not measured at FVTPL
If the hybrid contract is a quoted financial liability instead of separating the embedded derivative the Group generally designates the whole hybrid contract at FVTPL
An embedded derivative is presented as a non-current asset or non-current liability if the remaining maturity of the hybrid instrument to which the embedded derivative relates is more than 12 months and is not expected to be realised or settled within 12 months
IFRS 721 Hedge accounting
The Group designates certain derivatives as hedging instruments in respect of foreign currency risk and interest rate risk in fair value hedges cash flow hedges or hedges of net investments in foreign operations Hedges of foreign exchange risk on firm commitments are accounted for as cash flow hedges
At the inception of the hedge relationship the Group documents the relationship between the hedging instrument and the hedged item along with its risk management objectives and its strategy for undertaking various hedge transactions Furthermore at the inception of the hedge and on an ongoing basis the Group documents whether the hedging instrument is effective in offsetting changes in fair values or cash flows of the hedged item attributable to the hedged risk which is when the hedging relationships meet all of the following hedge effectiveness requirements
bull there is an economic relationship between the hedged item and the hedging instrument
bull the effect of credit risk does not dominate the value changes that result from that economic relationship and
bull the hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the Group actually hedges and the quantity of the hedging instrument that the Group actually uses to hedge that quantity of hedged item
If a hedging relationship ceases to meet the hedge effectiveness requirement relating to the hedge ratio but the risk management objective for that designated hedging relationship remains the same the Group adjusts the hedge ratio of the hedging relationship (ie rebalances the hedge) so that it meets the qualifying criteria again
The Group designates the full change in the fair value of a forward contract (ie including the forward elements) as the hedging instrument for all of its hedging relationships involving forward contracts
The Group designates only the intrinsic value of option contracts as a hedged item ie excluding the time value of the option The changes in the fair value of the aligned time value of the option are recognised in other comprehensive income and accumulated in the cost of hedging reserve If the hedged item is transaction-related the time value is reclassified to profit or loss when the hedged item affects profit or loss If the hedged item is time-period related then the amount accumulated in the cost of hedging reserve is reclassified to profit or loss on a rational basis ndash the Group applies straight-line amortisation Those reclassified amounts are recognised in profit
55
International GAAP Holdings Limited
Source International GAAP Holdings Limited
or loss in the same line as the hedged item If the hedged item is a non-financial item then the amount accumulated in the cost of hedging reserve is removed directly from equity and included in the initial carrying amount of the recognised non-financial item Furthermore if the Group expects that some or all of the loss accumulated in cost of hedging reserve will not be recovered in the future that amount is immediately reclassified to profit or loss
Note 63(a) sets out details of the fair values of the derivative instruments used for hedging purposes
Movements in the hedging reserve in equity are detailed in note 47
Fair value hedges
The fair value change on qualifying hedging instruments is recognised in profit or loss except when the hedging instrument hedges an equity instrument designated at FVTOCI in which case it is recognised in other comprehensive income
The carrying amount of a hedged item not already measured at fair value is adjusted for the fair value change attributable to the hedged risk with a corresponding entry in profit or loss For debt instruments measured at FVTOCI the carrying amount is not adjusted as it is already at fair value but the hedging gain or loss is recognised in profit or loss instead of other comprehensive income When the hedged item is an equity instrument designated at FVTOCI the hedging gain or loss remains in other comprehensive income to match that of the hedging instrument
Where hedging gains or losses are recognised in profit or loss they are recognised in the same line as the hedged item
The Group discontinues hedge accounting only when the hedging relationship (or a part thereof) ceases to meet the qualifying criteria (after rebalancing if applicable) This includes instances when the hedging instrument expires or is sold terminated or exercised The discontinuation is accounted for prospectively The fair value adjustment to the carrying amount of the hedged item arising from the hedged risk is amortised to profit or loss from that date
Cash flow hedges
The effective portion of changes in the fair value of derivatives and other qualifying hedging instruments that are designated and qualify as cash flow hedges is recognised in other comprehensive income and accumulated under the heading of cash flow hedging reserve limited to the cumulative change in fair value of the hedged item from inception of the hedge The gain or loss relating to the ineffective portion is recognised immediately in profit or loss and is included in the lsquoother gains and lossesrsquo line item
Amounts previously recognised in other comprehensive income and accumulated in equity are reclassified to profit or loss in the periods when the hedged item affects profit or loss in the same line as the recognised hedged item However when the hedged forecast transaction results in the recognition of a non-financial asset or a non-financial liability the gains and losses previously recognised in other comprehensive income and accumulated in equity are removed from equity and included in the initial measurement of the cost of the non-financial asset or non-financial liability This transfer does not affect other comprehensive income Furthermore if the Group expects that some or all of the loss accumulated in the cash flow hedging reserve will not be recovered in the future that amount is immediately reclassified to profit or loss
The Group discontinues hedge accounting only when the hedging relationship (or a part thereof) ceases to meet the qualifying criteria (after rebalancing if applicable) This includes instances when the hedging instrument expires or is sold terminated or exercised The discontinuation is accounted for prospectively Any gain or loss recognised in other comprehensive income and accumulated in cash flow hedge reserve at that time remains in equity and is reclassified to profit or loss when the forecast transaction occurs When a forecast transaction is no longer expected to occur the gain or loss accumulated in the cash flow hedge reserve is reclassified immediately to profit or loss
Hedges of net investments in foreign operations
Hedges of net investments in foreign operations are accounted for similarly to cash flow hedges Any gain or loss on the foreign currency forward contracts relating to the effective portion of the hedge is recognised in other comprehensive income and accumulated in the foreign currency translation reserve The gain or loss relating to the ineffective portion is recognised immediately in profit or loss and is included in the lsquoother gains and lossesrsquo line item
56
International GAAP Holdings Limited
Source International GAAP Holdings Limited
Gains and losses on the hedging instrument accumulated in the foreign currency translation reserve are reclassified to profit or loss on the disposal or partial disposal of the foreign operation
Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event it is probable that the Group will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting date taking into account the risks and uncertainties surrounding the obligation Where a provision is measured using the cash flows estimated to settle the present obligation its carrying amount is the present value of those cash flows (when the effect of the time value of money is material)
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably
Restructurings
A restructuring provision is recognised when the Group has developed a detailed formal plan for the restructuring and has raised a valid expectation in those affected that it will carry out the restructuring by starting to implement the plan or announcing its main features to those affected by it The measurement of a restructuring provision includes only the direct expenditures arising from the restructuring which are those amounts that are both necessarily entailed by the restructuring and not associated with the ongoing activities of the entity
Warranties
Provisions for the expected cost of warranty obligations under local sale of goods legislation are recognised at the date of sale of the relevant products at the directorsrsquo best estimate of the expenditure required to settle the Grouprsquos obligation
Onerous contracts
Present obligations arising under onerous contracts are recognised and measured as provisions An onerous contract is considered to exist where the Group has a contract under which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it
Restoration provisions
Provisions for the costs to restore leased plant assets to their original condition as required by the terms and conditions of the lease are recognised when the obligation is incurred either at the commencement date or as a consequence of having used the underlying asset during a particular period of the lease at the directorsrsquo best estimate of the expenditure that would be required to restore the assets Estimates are regularly reviewed and adjusted as appropriate for new circumstances
Contingent liabilities acquired in a business combination
Contingent liabilities acquired in a business combination are initially measured at fair value at the acquisition date At the end of subsequent reporting periods such contingent liabilities are measured at the higher of the amount that would be recognised in accordance with IAS 37 and the amount recognised initially less cumulative amount of income recognised in accordance with the principles of IFRS 15
Own shares
Own shares represent the shares of the parent company International GAAP Holdings Limited that are held in treasury or by the Employee Benefit Trust Own shares are recorded at cost and deducted from equity
Share‑based payments
Share-based payment transactions of the Company
Equity-settled share-based payments to employees and others providing similar services are measured at the fair
57
International GAAP Holdings Limited
Source International GAAP Holdings Limited
value of the equity instruments at the grant date The fair value excludes the effect of non-market-based vesting conditions Details regarding the determination of the fair value of equity-settled share-based transactions are set out in note 58
The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period based on the Grouprsquos estimate of the number of equity instruments that will eventually vest At each reporting date the Group revises its estimate of the number of equity instruments expected to vest as a result of the effect of non-market-based vesting conditions The impact of the revision of the original estimates if any is recognised in profit or loss such that the cumulative expense reflects the revised estimate with a corresponding adjustment to reserves
Equity-settled share-based payment transactions with parties other than employees are measured at the fair value of the goods or services received except where that fair value cannot be estimated reliably in which case they are measured at the fair value of the equity instruments granted measured at the date the entity obtains the goods or the counterparty renders the service
For cash-settled share-based payments a liability is recognised for the goods or services acquired measured initially at the fair value of the liability At each reporting date until the liability is settled and at the date of settlement the fair value of the liability is remeasured with any changes in fair value recognised in profit or loss for the year
Share-based payment transactions of the acquiree in a business combination
When the share-based payment awards held by the employees of an acquiree (acquiree awards) are replaced by the Grouprsquos share-based payment awards (replacement awards) both the acquiree awards and the replacement awards are measured in accordance with IFRS 2 (market-based measure) at the acquisition date The portion of the replacement awards that is included in measuring the consideration transferred in a business combination equals the market-based measure of the acquiree awards multiplied by the ratio of the portion of the vesting period completed to the greater of the total vesting period or the original vesting period of the acquiree award The excess of the market-based measure of the replacement awards over the market-based measure of the acquiree awards included in measuring the consideration transferred is recognised as remuneration cost for post-combination service
However when the acquiree awards expire as a consequence of a business combination and the Group replaces those awards when it does not have an obligation to do so the replacement awards are measured at their market-based measure in accordance with IFRS 2 All of the market-based measure of the replacement awards is recognised as remuneration cost for post-combination service
At the acquisition date when the outstanding equity-settled share-based payment transactions held by the employees of an acquiree are not exchanged by the Group for its share-based payment transactions the acquiree share-based payment transactions are measured at their market-based measure at the acquisition date If the share-based payment transactions have vested by the acquisition date they are included as part of the non-controlling interest in the acquiree However if the share-based payment transactions have not vested by the acquisition date the market-based measure of the unvested share-based payment transactions is allocated to the non-controlling interest in the acquiree based on the ratio of the portion of the vesting period completed to the greater of the total vesting period or the original vesting period of the share-based payment transaction The balance is recognised as remuneration cost for post-combination service
IAS 1122
IAS 721 IAS 154
IAS 739(c)
Supplier financing arrangements and factoring of receivables An entity may enter into arrangements under which a lsquofactorrsquo (typically a financial institution) pays a supplier on its behalf with the entity (ie the purchaser) then reimbursing the factor Such arrangements may be referred to as for example lsquosupplier financingrsquo lsquoreverse factoringrsquo or lsquostructured payable arrangementsrsquo When such arrangements are material clear disclosure should be provided of the following bull the approach to the presentation of significant supplier financing arrangements and in accordance with IAS 1122 the judgements made in applying that policy
bull how supplier financing transactions have been reflected in the statement of cash flows
bull the carrying amount of the liabilities in question and the line item(s) in which they are presented and
bull when supplier financing arrangements have been used as a tool to manage liquidity risk the disclosures required by IFRS 739(c)
58
International GAAP Holdings Limited
Source International GAAP Holdings Limited
IAS 744A-E
Supplier financing arrangements and factoring of receivables
When an entity enters into arrangements for factoring of receivables where they are not fully derecognised it is important that the policy adopted for the treatment of cash flows arising is clearly explained and that any non‑cash financing transactions are disclosed in accordance with IAS 743 In particular an explanation of whether the cash flows received on the receivables are treated as operating inflows with associated financing outflows that are deemed to repay the financing liability that was recognised when the receivables were transferred Balances that will give rise to financing cash flows should also be included in the disclosure of changes in such balances required by IAS744A‑44E
4 Critical accounting judgements and key sources of estimation uncertainty
Commentary
The following are examples of the types of disclosures that might be required in this area The nature of these disclosures is very specific to an individual Grouprsquos particular circumstances Although the Model Financial Statements illustrate disclosures to comply with these requirements it is unlikely that these specific model disclosures would be appropriate other than in very rare circumstances
In applying the Grouprsquos accounting policies which are described in note 3 the directors are required to make judgements (other than those involving estimations) that have a significant impact on the amounts recognised and to make estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant Actual results may differ from these estimates
The estimates and underlying assumptions are reviewed on an ongoing basis Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods
IAS 1122 Critical judgements in applying the Grouprsquos accounting policies
The following are the critical judgements apart from those involving estimations (which are presented separately below) that the directors have made in the process of applying the Grouprsquos accounting policies and that have the most significant effect on the amounts recognised in financial statements
IFRS 15123(a) IFRS 15125
Judgements in determining the timing of satisfaction of performance obligations
Note 8 describes the expenditure required in the year for rectification work carried out on goods supplied to one of the Grouprsquos major customers These goods were delivered to the customer in the months of __ to __ 2020 and shortly thereafter the defects were identified by the customer Following negotiations a schedule of works was agreed which will involve expenditure by the Group until 2021 In the light of the problems identified management was required to consider whether it was appropriate to recognise the revenue from these transactions of CU__ million in the current year in line with the Grouprsquos general policy of recognising revenue when goods are delivered or whether it was more appropriate to defer recognition until the rectification work was complete
In making their judgement the directors considered the detailed criteria for the recognition of revenue set out in IFRS 15 and in particular whether the Group had transferred control of the goods to the customer Following the detailed quantification of the Grouprsquos liability in respect of rectification work and the agreed limitation on the customerrsquos ability to require further work or to require replacement of the goods the directors are satisfied that control has been transferred and that recognition of the revenue in the current year is appropriate in conjunction with the recognition of an appropriate warranty provision for the rectification costs
Capitalisation of borrowing costs
As described in note 3 the Group capitalises borrowing costs directly attributable to the acquisition construction or production of qualifying assets Capitalisation of the borrowing costs relating to construction of the Grouprsquos premises in [A Land] was suspended in 2019 while the development was delayed as management reconsidered its detailed plans Capitalisation of borrowing costs recommenced in 2020 ndash following the finalisation of revised plans and the resumption of the activities necessary to prepare the asset for its intended use Although construction of the premises was not restarted until May 2020 borrowing costs have been capitalised from February 2020 at which time the technical and administrative work associated with the project recommenced
59
International GAAP Holdings Limited
Source International GAAP Holdings Limited
Business model assessment
Classification and measurement of financial assets depends on the results of the SPPI and the business model test (please see financial assets sections of note 3) The Group determines the business model at a level that reflects how groups of financial assets are managed together to achieve a particular business objective This assessment includes judgement reflecting all relevant evidence including how the performance of the assets is evaluated and their performance measured the risks that affect the performance of the assets and how these are managed and how the managers of the assets are compensated The Group monitors financial assets measured at amortised cost or fair value through other comprehensive income that are derecognised prior to their maturity to understand the reason for their disposal and whether the reasons are consistent with the objective of the business for which the asset was held Monitoring is part of the Grouprsquos continuous assessment of whether the business model for which the remaining financial assets are held continues to be appropriate and if it is not appropriate whether there has been a change in business model and so a prospective change to the classification of those assets No such changes were required during the periods presented
Significant increase in credit risk
As explained in note 3 ECL are measured as an allowance equal to 12-month ECL for stage 1 assets or lifetime ECL for stage 2 or stage 3 assets An asset moves to stage 2 when its credit risk has increased significantly since initial recognition IFRS 9 does not define what constitutes a significant increase in credit risk In assessing whether the credit risk of an asset has significantly increased the Group takes into account qualitative and quantitative reasonable and supportable forward-looking information
Deferred taxation on investment properties
For the purposes of measuring deferred tax liabilities or deferred tax assets arising from investment properties that are measured using the fair value model the directors have reviewed the Grouprsquos investment property portfolios and concluded that the Grouprsquos investment properties are not held under a business model whose objective is to consume substantially all of the economic benefits embodied in the investment properties over time rather than through sale Therefore in determining the Grouprsquos deferred taxation on investment properties the directors have determined that the presumption that the carrying amounts of investment properties measured using the fair value model are recovered entirely through sale is not rebutted As a result the Group has not recognised any deferred taxes on changes in fair value of investment properties as the Group is not subject to any income taxes on the fair value changes of the investment properties on disposal
IFRS 127(a) Control over Subsidiary B Limited
IFRS 129(b) Note 21 describes that Subsidiary B Limited is a subsidiary of the Group even though the Group has only a 45 per cent ownership interest and has only 45 per cent of the voting rights in Subsidiary B Limited Subsidiary B Limited is listed on the stock exchange of [A Land] The Group has held its 45 per cent ownership since June 2016 and the remaining 55 per cent of the ownership interests are held by thousands of shareholders that are unrelated to the Group
The directors of the Company assessed whether or not the Group has control over Subsidiary B Limited based on whether the Group has the practical ability to direct the relevant activities of Subsidiary B Limited unilaterally In making their judgement the directors considered the Grouprsquos absolute size of holding in Subsidiary B Limited and the relative size of and dispersion of the shareholdings owned by the other shareholders After assessment the directors concluded that the Group has a sufficiently dominant voting interest to direct the relevant activities of Subsidiary B Limited and therefore the Group has control over Subsidiary B Limited
If the directors had concluded that the 45 per cent ownership interest was insufficient to give the Group control Subsidiary B Limited would instead have been classified as an associate and the Group would have accounted for it using the equity method of accounting
IFRS 127(b) Significant influence over Associate B Limited
IFRS 129(e) Note 22 describes that Associate B Limited is an associate of the Group although the Group only owns a 17 per cent ownership interest in Associate B Limited The Group has significant influence over Associate B Limited by virtue of its contractual right to appoint two out of seven directors to the board of directors of that entity
60
International GAAP Holdings Limited
Source International GAAP Holdings Limited
Judgement in identifying whether a contract includes a lease ‑ Contract for the supply of sports shoes
The Group has entered into a contract with [Manufacturer A] for the supply of sports shoes for a three-year period Each month the type of sports shoes and the production volume up to a limit of [X ] pairs are determined by the Group and are not specified in the contract
[Manufacturer A] has only one factory that can meet the needs of the Group and is unable to supply the sports shoes from another factory or source the sports shoes from a third party supplier [Manufacturer A] makes all decisions about the operations of the factory including the production level at which to run the factory and which customer contracts to fulfil with the output of the factory that is not used to fulfil the Grouprsquos contract for that month
The directors of the Company assessed whether or not the Group has contracted for the rights to substantially all of the capacity of the factory and whether the contract with [Manufacturer A] contains a lease for the factory After making inquiries based on forecast production volumes over the contract term the directors have established that [Manufacturer A] can regularly use the factory for other purposes during the course of the contract to supply other customers and therefore the Group does not have the right to obtain substantially all of the economic benefits from the use of the factory As a result the directors concluded that the Group has not contracted for substantially all of the capacity of the factory including the plant therein and therefore the contract does not contain a lease
IAS 1125 Key sources of estimation uncertainty
IAS 1128 IAS 1129 IAS 1131
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting period that may have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below
Taxation provisions
The Grouprsquos current tax provision of CU__ relates to managementrsquos assessment of the amount of tax payable on open tax positions where the liabilities remain to be agreed with [insert name of relevant Tax Authority] Uncertain tax items for which a provision of CU__ is made relate principally to the interpretation of tax legislation regarding arrangements entered into by the Group Due to the uncertainty associated with such tax items there is a possibility that on conclusion of open tax matters at a future date the final outcome may differ significantly Whilst a range of outcomes is reasonably possible the extent of the reasonably possible range is from additional liabilities of up to CU__ to a reduction in liabilities of up to CU__
Impairment testing
Following the assessment of the recoverable amount of goodwill allocated to lsquoLeisure goods ndash retail outletsrsquo to which goodwill of CU__ is allocated the directors consider the recoverable amount of goodwill allocated to lsquoLeisure goods ndash retail outletsrsquo to be most sensitive to the achievement of the 2021 budget Budgets comprise forecasts of revenue staff costs and overheads based on current and anticipated market conditions that have been considered and approved by the Board Whilst the Group is able to manage most of lsquoLeisure goods ndash retail outletsrsquo costs the revenue projections are inherently uncertain due to the short-term nature of the business and unstable market conditions Revenue of the CGU is most sensitive to changes in the sectors demand for sales in retail outlets reflecting the increased use of internet sales by rivals a service which the Group does not currently offer
The market for lsquoLeisure goods ndash retail outletsrsquo products has seen a significant slowdown over the past 18 months due to a decline in the customer appetite for retail sales and increases in internet sales of rivals in the sector It is possible that further underperformance may occur in 2021 if prevailing trends continue
The sensitivity analysis in respect of the recoverable amount of lsquoLeisure goods ndash retail outletsrsquo goodwill is presented in note 17
Calculation of loss allowance
When measuring ECL the Group uses reasonable and supportable forward-looking information which is based on assumptions for the future movement of different economic drivers and how these drivers will affect each other
61
International GAAP Holdings Limited
Source International GAAP Holdings Limited
Loss given default is an estimate of the loss arising on default It is based on the difference between the contractual cash flows due and those that the lender would expect to receive taking into account cash flows from collateral and integral credit enhancements
Probability of default constitutes a key input in measuring ECL Probability of default is an estimate of the likelihood of default over a given time horizon the calculation of which includes historical data assumptions and expectations of future conditions
If the ECL rates on trade receivables between 61 and 90 days past due had been __ per cent higher (lower) as of December 2020 the loss allowance on trade receivables would have been CU__ million (2019 CU__ million) higher (lower)
If the ECL rates on trade receivables between 31 and 60 days past due had been __ per cent higher (lower) as of December 2020 the loss allowance on trade receivables would have been CU__ million (2019 CU__ million) higher (lower)
Discount rate used to determine the carrying amount of the Grouprsquos defined benefit obligation
The determination of the Grouprsquos defined benefit obligation depends on certain assumptions which include selection of the discount rate The discount rate is set by reference to market yields at the end of the reporting period on high quality corporate bonds Significant assumptions are required to be made when setting the criteria for bonds to be included in the population from which the yield curve is derived The most significant criteria considered for the selection of bonds include the issue size of the corporate bonds quality of the bonds and the identification of outliers which are excluded These assumptions are considered to be a key source of estimation uncertainty as relatively small changes in the assumptions used may have a significant effect on the Grouprsquos financial statements within the next year Further information on the carrying amounts of the Grouprsquos defined benefit obligation and the sensitivity of those amounts to changes in discount rate are provided in note 59
Fair value measurements and valuation processes
Some of the Grouprsquos assets and liabilities are measured at fair value for financial reporting purposes The board of directors of the Company has set up a valuation committee which is headed up by the Chief Financial Officer of the Company to determine the appropriate valuation techniques and inputs for fair value measurements
In estimating the fair value of an asset or a liability the Group uses market-observable data to the extent it is available Where Level 1 inputs are not available the Group engages third party qualified valuers to perform the valuation The valuation committee works closely with the qualified external valuers to establish the appropriate valuation techniques and inputs to the model The Chief Financial Officer reports the valuation committeersquos findings to the board of directors of the Company every quarter to explain the cause of fluctuations in the fair value of the assets and liabilities
The valuations of private equity investments contingent consideration in business combinations and non-derivative financial assets held for trading are particularly sensitive to changes in one or more unobservable inputs which are considered reasonably possible within the next financial year Further information on the carrying amounts of these assets and the sensitivity of those amounts to changes in unobservable inputs are provided in note 63(a)(i)
Provision for restoration of contaminated land
On 15 December 2020 new legislation in [A Land] was enacted which resulted in the requirement for the Company to clean up historically contaminated waste sites in [A Land] and bear the costs thereof Consequently a provision of CU__ million has been recognised In estimating the provision the directors have made assumptions regarding the interpretation of the legislation and have estimated costs based on currently available information about the likely extent of contamination and potential clean-up techniques Due to the associated uncertainty it is possible that estimates may need to be revised during the next year as interpretations of the legislation evolve and the extent of contamination and potential approaches to clean-up are assessed in more detail Whilst a range of outcomes is possible the directors believe that the reasonably possible range is an increase in provisions of up to CU__ million to a reduction in provisions of up to CU__ million See note 40 for further details
62
International GAAP Holdings Limited
Source International GAAP Holdings Limited
Assessment as to whether the right‑of‑use assets are impaired
In January 2014 [Subsidiary D Limited] a subsidiary of the Group entered into a 10-year lease for an office building located in [location] Following the acquisition of [Acquisition A Limited] on [date] 2020 and the subsequent restructuring programme the Group identified that the office space occupied by [Subsidiary E Limited] which is also located in [location] could accommodate all of the staff of [Subsidiary D Limited] and took the decision to relocate staff to a single office The leased property previously occupied by [Subsidiary D Limited] has been marketed with a local estate agent and is expected to be sub-leased by the firm for the remainder of the lease term
The directors have estimated that the entirety of the lease payment will be recoverable through the sub-lease of the property This reflects the current achievable market rates for similar properties with similar lease terms and therefore no impairment has been recognised The carrying amount of right-of-use asset in respect of the property is CU__ at 31 December 2020 (2019 CU__)
In estimating the recoverable amount of the right-of-use asset the directors have made assumptions about the achievable market rates for similar properties with similar lease terms Due to the associated uncertainty it is possible that the estimates of the amount of lease payment that will be recovered through the sub-lease of the property may need to be revised during the next year Achieving a sub-lease for only 95 per cent of the lease payment is considered reasonably possible based on recent experience in the market and would lead to an impairment charge of CU__ against the right-of-asset in respect of the property
IFRS 15113(a) 5 Revenue
IFRS 15115 The Group derives its revenue from contracts with customers for the transfer of goods and services over time and at a point in time in the following major product lines The disclosure of revenue by product line is consistent with the revenue information that is disclosed for each reportable segment under IFRS 8 (see note 6)
IFRS 15114 IFRS 15B87-89
Disaggregation of revenue
31122020 31122019
CU CU
External revenue by product line
Electronic equipment ndash direct sale customers
Electronic equipment ndash wholesale customers
Electronic equipment ndash internet customers
Leisure goods ndash wholesale customers
Leisure goods ndash retail outlets
Computer software installation
Construction
Total
63
International GAAP Holdings Limited
Source International GAAP Holdings Limited
31122020 31122019
CU CU
External revenue by timing of revenue
Goods transferred at a point in time
Goods transferred over time
Services transferred at a point in time
Services transferred over time
Total
Commentary
IFRS 15114 requires an entity to disaggregate revenue recognised from contracts with customers into categories that depict how the nature amount timing and uncertainty of revenue and cash flows are affected by economic factors This disaggregation will depend on the entitys individual facts and circumstances
In the model financial statements the Group has assessed that the disaggregation of revenue by operating segments is appropriate in meeting this disclosure requirement as this is the information regularly reviewed by the chief operating decision maker (CODM) in order to evaluate the financial performance of the entity
If an entity discloses disaggregated revenue on a basis other than that used for revenue information disclosed for each reportable segment then the entity should disclose sufficient information to allow users of the financial statements to understand the relationship between these two disclosures
IFRS 15120(a) The transaction price allocated to (partially) unsatisfied performance obligations at 31 December 2020 are as set out below
31122020 31122019
CU CU
Maintenance obligations relating to electronic equipment
Installation of computer software services
Construction of residential properties
IFRS 15120(b) Management expects that __ per cent of the transaction price allocated to the unsatisfied contracts as of the year ended 2020 will be recognised as revenue during the next reporting period (CU__ million) The remaining __per cent CU__ million will be recognised in the 2022 financial year and CU__ million in the 2023 financial year
64
International GAAP Holdings Limited
Source International GAAP Holdings Limited
Commentary
There is no requirement in IFRS 15 for contract balances (ie contract assets receivables and contract liabilities) to be disclosed together at a single place in the financial statements Indeed entities will likely continue to include balances arising from contracts with customers within the same financial statement line item and related note as previously under IAS 18 (eg contract liabilities within a deferred revenue note) IFRS 15 allows entities to use terms other than contract asset and contract liability to describe such balances
Contract balances and the related disclosures have been included in the following places in the notes to the Grouprsquos accounts
Receivables Balance described as lsquoTrade receivablesrsquo (Note 31)
Contract assets Note 28
Contract costs Note 29
Contract liabilities Note 61
Materiality considerations will affect the line items to be disclosed separately within each relevant IFRS 15 contract balance A single net contract asset or liability should be presented for each contract balance
6 Operating segments
Commentary
When are entities required to present segment information
The following segment information is required by IFRS 8 to be presented in the consolidated financial statements of a group with a parent (and in the separate or individual financial statements of an entity)
bull whose debt or equity instruments are traded in a public market (a domestic or foreign stock exchange or an over the counter market including local and regional markets) or
bull that files or is in the process of filing its (consolidated) financial statements with a securities commission or other regulatory organisation for the purpose of issuing any class of instruments in a public market
What needs to be disclosed when entities aggregate operating segments into a single operating segment
IFRS 822 requires entities to give a brief description of the operating segments that have been aggregated and the economic indicators that have been assessed in determining the aggregated operating segments share similar economic characteristics
According to IFRS 812 two or more operating segments may be aggregated into a single operating segment if the segments have similar economic characteristics and the segments are similar in each of the following respects bull the nature of the products and services
bull the nature of the production processes
bull the type or class of customer for their products and services
bull the methods used to distribute their products or provide their services and
bull if applicable the nature of the regulatory environment for example banking insurance or public utilities
IFRS 822 Products and services from which reportable segments derive their revenues
Information reported to the Grouprsquos Chief Executive (the Chief Operating Decision Maker (CODM)) for the purposes of resource allocation and assessment of segment performance is focused on the category of customer for each type of activity The principal categories of customer are direct sales to major customers wholesalers and internet sales The Grouprsquos reportable segments under IFRS 8 are therefore as follows
[Segment A] ndash Electronic equipment ndash direct sale customers
[Segment B] ndash Electronic equipment ndash wholesale customers
65
International GAAP Holdings Limited
Source International GAAP Holdings Limited
[Segment C] ndash Electronic equipment ndash internet customers
[Segment D] ndash Leisure goods ndash wholesale customers
[Segment E] ndash Leisure goods ndash retail outlets
[Segment F] ndash Computer software ndash installation of computer software for specialised business applications
[Segment G] ndash Construction ndash construction of residential properties
IFRS 822(aa)
IFRS 55B
The leisure goods segments supply sports shoes and equipment as well as outdoor play equipment
The electronic equipment (direct sales) segment includes a number of direct sales operations in various cities within Country A each of which is considered as a separate operating segment by the CODM For financial statements presentation purposes these individual operating segments have been aggregated into a single operating segment taking into account the following factors
bull these operating segments have similar long-term gross profit margins
bull the nature of the products and production processes are similar and
bull the methods used to distribute the products to the customers are the same
bull [Other factors please specify]
Two operations (the manufacture and sale of toys and bicycles) were discontinued in the current year The segment information reported on the next pages does not include any amounts for these discontinued operations which are described in more detail in note 14
Other operations include [identify other operations and their sources of revenue if any]
66
International GAAP Holdings Limited
Source International GAAP Holdings Limited
Segment revenues and profits
The following is an analysis of the Grouprsquos revenue and results by reportable segment in 2020
IFRS 823(a)
IFRS 823(b)
IFRS 828(a)
IFRS 827(a)
IFRS 823
IFRS 828(b)
[Segment A] 2020
[Segment B] 2020
[Segment C] 2020
[Segment D] 2020
[Segment E] 2020
[Segment F] 2020
[Segment G] 2020
Other 2020
Eliminations 2020
Consolidated 2020
CU CU CU CU CU CU CU CU CU CU
Revenue
External sales
Inter-segment sales
( )
Total revenue ( )
Inter-segment sales are charged at prevailing market prices
Result
Segment profit
Central administration costs
Share of profit of associates
Share of profit from joint ventures
Finance income
Other gains and losses
Finance costs
Profit before tax
Income tax
Profit for the year from discontinued operations
Profit after tax and discontinued operations
67
International GAAP Holdings Limited
Source International GAAP Holdings Limited
Segment revenues and profits
The following is an analysis of the Grouprsquos revenue and results by reportable segment in 2020
IFRS 823(a)
IFRS 823(b)
IFRS 828(a)
IFRS 827(a)
IFRS 823
IFRS 828(b)
[Segment A] 2020
[Segment B] 2020
[Segment C] 2020
[Segment D] 2020
[Segment E] 2020
[Segment F] 2020
[Segment G] 2020
Other 2020
Eliminations 2020
Consolidated 2020
CU CU CU CU CU CU CU CU CU CU
Revenue
External sales
Inter-segment sales
( )
Total revenue ( )
Inter-segment sales are charged at prevailing market prices
Result
Segment profit
Central administration costs
Share of profit of associates
Share of profit from joint ventures
Finance income
Other gains and losses
Finance costs
Profit before tax
Income tax
Profit for the year from discontinued operations
Profit after tax and discontinued operations
68
International GAAP Holdings Limited
Source International GAAP Holdings Limited
The following is an analysis of the Grouprsquos revenue and results by reportable segment in 2019
IFRS 823(a)
IFRS 823(b)
IFRS 828(a)
IFRS 827(a)
IFRS 823
IFRS 828(b)
[Segment A] 2019
[Segment B] 2019
[Segment C] 2019
[Segment D] 2019
[Segment E] 2019
[Segment F] 2019
[Segment G] 2019
Other 2019
Eliminations 2019
Consolidated 2019
CU CU CU CU CU CU CU CU CU CU
Revenue
External sales
Inter-segment sales ( )
Total revenue ( )
Inter-segment sales are charged at prevailing market prices
Result
Segment profit
Central administration costs
Share of profit of associates
Share of profit from joint ventures
Finance Income
Other gains and losses
Finance costs
Profit before tax
Income tax
Profit for the year from discontinued operations
Profit after tax and discontinued operations
69
International GAAP Holdings Limited
Source International GAAP Holdings Limited
The following is an analysis of the Grouprsquos revenue and results by reportable segment in 2019
IFRS 823(a)
IFRS 823(b)
IFRS 828(a)
IFRS 827(a)
IFRS 823
IFRS 828(b)
[Segment A] 2019
[Segment B] 2019
[Segment C] 2019
[Segment D] 2019
[Segment E] 2019
[Segment F] 2019
[Segment G] 2019
Other 2019
Eliminations 2019
Consolidated 2019
CU CU CU CU CU CU CU CU CU CU
Revenue
External sales
Inter-segment sales ( )
Total revenue ( )
Inter-segment sales are charged at prevailing market prices
Result
Segment profit
Central administration costs
Share of profit of associates
Share of profit from joint ventures
Finance Income
Other gains and losses
Finance costs
Profit before tax
Income tax
Profit for the year from discontinued operations
Profit after tax and discontinued operations
70
International GAAP Holdings Limited
Source International GAAP Holdings Limited
IFRS 827
IFRS 823(f)
The accounting policies of the reportable segments are the same as the Grouprsquos accounting policies described in note 3 Segment profit represents the profit earned by each segment without allocation of the share of profits of associates and joint ventures central administration costs including directorsrsquo salaries finance income non-operating gains and losses in respect of financial instruments and finance costs and income tax expense This is the measure reported to the Grouprsquos Chief Executive for the purpose of resource allocation and assessment of segment performance
The exceptional rectification work costs of CU__ disclosed in note 8 relate to the [identify segment]
IFRS 827 Segment assets
31122020 31122019
CU CU
[Segment A]
[Segment B]
[Segment C]
[Segment D]
[Segment E]
[Segment F]
[Segment G]
Other
Total segment assets
Assets relating to discontinued operations
Unallocated assets
IFRS 828(c) Consolidated total assets
IFRS 8(27(c)
For the purposes of monitoring segment performance and allocating resources between segments the Grouprsquos Chief Executive monitors the tangible intangible and financial assets attributable to each segment All assets are allocated to reportable segments with the exception of investments in associates and joint ventures other financial assets (except for trade and other receivables) (see note 32) and tax assets Goodwill has been allocated to reportable segments as described in note 17 Assets used jointly by reportable segments are allocated on the basis of the revenues earned by individual reportable segments
71
International GAAP Holdings Limited
Source International GAAP Holdings Limited
Other segment information
IFRS 823(e) IFRS 824(b)
Depreciation and amortisation Additions to non-current assets
31122020 31122019 31122020 31122019
CU CU CU CU
[Segment A]
[Segment B]
[Segment C]
[Segment D]
[Segment E]
[Segment F]
[Segment G]
Other
IFRS 823(h) IAS 36129
The amounts exclude additions to financial instruments deferred tax assets and net defined benefit assets
In addition to the depreciation and amortisation reported above impairment losses of CU__ (2019 CU__) and CU__ (2019 CU__) were recognised in respect of property plant and equipment and goodwill respectively These impairment losses were attributable to the following reportable segments
31122020 31122019
CU CU
[Segment A]
[Segment E]
IFRS 832 Revenues from major products and services
The Grouprsquos revenues from its major products and services are disclosed in note 5
72
International GAAP Holdings Limited
IAS 197 ndash 98 IAS 198(b)
7 Restructuring costs
In [month] 2020 the Group disposed of [name of subsidiary] (see note 53) Certain of the non-core assets of the [____] division were retained by the Group In addition the [____] operations of the [____] division were segregated from the manufacturing operations and retained by the Group The assets retained were scrapped and an impairment loss recognised in respect of their previous carrying amount To the extent that employees could not be redeployed redundancy terms were agreed
The restructuring costs charged to profit or loss consist of the following
31122020
CU
Impairment loss recognised in respect of assets
Redundancy costs
Source International GAAP Holdings Limited
Geographical information
The Grouprsquos revenue from external customers and information about its segment assets (non-current assets excluding financial instruments deferred tax assets and other financial assets) by geographical location are detailed below
IFRS 833(a) IFRS 833(b)
Revenue from external customers
Non-current assets
31122020 31122019 31122020 31122019 112019
CU CU CU CU CU
[A Land]
[B Land]
[C Land]
[D Land]
Other
Non-current assets exclude those relating to discontinued operations and non-current assets held for sale
IFRS 834 Information about major customers
Included in revenues arising from [Segment A] are revenues of approximately CU__ million (2019 CU__ million) which arose from sales to the Grouprsquos largest customer No other single customers contributed 10 per cent or more to the Grouprsquos revenue in either 2020 or 2019
73
International GAAP Holdings Limited
Source International GAAP Holdings Limited
IAS 1104 8 Profit for the year
Profit for the year has been arrived at after charging(crediting)
31122020 31122019
CU CU
IAS 2152(a) Net foreign exchange losses(gains)
IAS 38126 Research and development costs
IAS 2020 Government grant for the purpose of immediate financial support
IAS 2039(b) Government grants towards training costs
Amortisation of government grants towards purchase of property plant and equipment
IAS 1104 Depreciation of property plant and equipment
IAS 36126(a) Impairment of property plant and equipment
IAS 197 - 98 Gain(loss) on disposal of property plant and equipment
IFRS 1653(a) IFRS 1649
Depreciation of right-of-use assets
IAS 38118(d) Amortisation of internally-generated intangible assets included in other expenses
IAS 36126(a) Impairment of goodwill
IAS 236(d) Cost of inventories recognised as expense
IAS 236(e) Write downs of inventories recognised as an expense
IAS 236(f) Reversal of write downs of inventories recognised in the year
IAS 1104 Employee benefit expense (see note 9)
IFRS 720(a)(vi) Loss allowance on trade receivables (note 32)
IFRS 720(a)(vi) Loss allowance on other financial assets measured at amortised cost (note 25)
IFRS 720(a)(viii) Loss allowance on debt investments measured at FVTOCI (note 44)
Loss allowance on amounts due from contract assets (note 28)
IAS 197 - 98
IAS 236(g)
IAS 2020 IAS 2039(b)
There was no loss allowance on financial guarantee contracts (note 39)
Costs of CU__ have been recognised during the year in respect of rectification work to be carried out on goods supplied to one of the Grouprsquos major customers which have been included in [specify caption]
[Describe circumstances or events that led to any reversal of any write-down of inventories]
In 2020 government grants of CU__ were received as part of a Government initiative to provide immediate financial support as a result of [describe event that led to receipt of grants and the effect the grants have on the results] There are no future related costs in respect of these grants which were received solely as compensation for costs incurred in the year Government grants towards training costs and purchase of property plant and equipment are described in note 60
74
International GAAP Holdings Limited
Source International GAAP Holdings Limited
9 Staff costs
31122020 31122019
CU CU
Post-employment benefits (note 59)
IAS 1953 Defined contribution plans
IAS 19135(b) Defined benefit plans
IFRS 250 Share-based payments (note 58)
IFRS 251(a) Equity-settled share-based payments
IFRS 251(a) Cash-settled share-based payments
IAS 1104 Termination benefits
Other employee benefits
IAS 1104 Total employee benefit expense
10 Finance income
31122020 31122019
CU CU
IFRS 720(b) Interest income
Financial instruments measured at amortised cost
bull Bank deposits
bull Other financial assets measured at amortised cost (see note 25)
Investment in debt instruments measured at FVTOCI (see note 25)
Other
IFRS 7B5(e) IFRS 711A(d)
Dividends received from equity investments designated as at FVTOCI (see note 25)
bull Relating to investments derecognised during the year
bull Relating to investments held at the end of the reporting period
Total finance income
75
International GAAP Holdings Limited
Source International GAAP Holdings Limited
11 Other gains and losses
31122020 31122019
CU CU
IFRS 720(a)(i) Net gain(loss) arising on financial liabilities designated as at FVTPL (i)
IFRS 720(a)(i) Net gain(loss) arising on financial assets mandatorily measured at FVTPL (ii)
IFRS 720(a)(i) Net gain(loss) arising on financial liabilities mandatorily measured at FVTPL (iii)
IFRS 720(a)(viii) Reclassification of net gain(loss) on debt investments classified as at FVTOCI from equity to profit or loss upon disposal
IFRS 720(a)(v) Net gain(loss) arising on derecognition of financial liabilities measured at amortised cost
IFRS 720(a)(v) IFRS 720A
Net gain(loss) arising on modification of financial instruments measured at amortised cost that were not derecognised
IAS 4076(d) Gain(loss) on remeasurement of investment property
IFRS 724A(c) IFRS 724C(b)(ii)
Hedge ineffectiveness on cash flow hedges
IFRS 724A(c) IFRS 724C(b)(ii)
Hedge ineffectiveness on net investment hedges
IFRIC 1911 (Gain)loss on debt for equity swap
Net foreign exchange gain(loss)
IAS 197
(i) The net loss on the redeemable preference shares designated as at FVTPL includes a gain of CU__ resulting from the decrease in fair value of the liabilities other than changes in the fair value of the liabilities attributable to the liabilitiesrsquo credit risk offset by dividends of CU__ paid during the year (note 12)
(ii) The amount represents a net gain on investments in listed equity shares (see note 25) and comprises an increase in fair value of CU__ (2019 CU__) including dividends of CU__ received during the year (2019 CU__)
(iii) The amount represents a net loss arising on an interest rate swap that economically hedges the fair value of the redeemable cumulative preference shares but for which hedge accounting is not applied (see note 35) The net loss on the interest rate swap comprises an increase in fair value of CU__ of the swap including interest of CU__ paid during the year
The (gain)loss arising on adjustment for the hedged item in a designated fair value hedge accounting relationship relates to the fixed rate bank loan details of which are disclosed in note 33 This (gain)loss forms part of the net gains or net losses on other financial liabilities carried at amortised cost
During the year the Group extinguished some of its borrowings by issuing equity instruments In accordance with IFRIC 19 the (gain)loss recognised on these transactions was CU__ (2019 CU__)
The foreign exchange gainslosses arose on the unhedged monetary items denominated in foreign currencies The amount predominantly consists of retranslation of bank loans of CU__ (2019 CU__)
76
International GAAP Holdings Limited
Source International GAAP Holdings Limited
12 Finance costs
31122020 31122019
CU CU
Interest on bank overdrafts and loans
Interest on convertible loan notes
IFRS 1649 IFRS 1653(b)
Interest on lease liabilities
IFRS 720(b) Total interest expense for financial liabilities not classified as at FVTPL
IAS 2326(a) Less amounts included in the cost of qualifying assets
IFRS 724C(a)(ii) IFRS 9658(a)
Loss(gain) arising on derivatives as designated hedging instruments in fair value hedges
IFRS 9658(b) (Gain)loss arising on adjustment for the hedged item attributable to the hedged risk in a designated fair value hedge accounting relationship
IFRS 724C(b)(iv) IFRS 96511(d)(ii)
(Gain)loss arising on interest rate swaps as designated hedging instruments in cash flow hedges of floating rate debt reclassified from equity to profit or loss
IFRS 724C(b)(iv) IFRS 96512(b)
(Gain)loss arising on forward foreign exchange contracts designated as hedging instruments in cash flow hedges of forecast transactions that are no longer expected to occur reclassified from equity to profit or loss
Unwinding of discount on provisions
IAS 19134 Net interest expense on defined benefit obligation
Other finance costs
IAS 2326(b) Borrowing costs included in the cost of qualifying assets during the year arose on the general borrowing pool and are calculated by applying a capitalisation rate of __ per cent (2019 __ per cent) to expenditure on such assets
77
International GAAP Holdings Limited
Source International GAAP Holdings Limited
13 Income Tax
31122020 31122019
CU CU
IAS 1279 - 80 Corporation income tax
Current year
Adjustments in respect of prior years
IAS 1279 - 80 Deferred tax (see note 36)
Origination and reversal of temporary differences
Effect of changes in tax rates
Write-down of previously recognised deferred tax assets
Other [describe]
The standard rate of corporation tax applied to reported profit is __ per cent (2019 __ per cent)
IAS 1285
Commentary
The applicable rate used in the tax reconciliation should provide the most meaningful information to users of the financial statements When profits are earned across a number of jurisdictions default to the tax rate in the country of domicile may not provide the most meaningful information It may be more appropriate to use a weighted average applicable rate for the year reflecting the applicable rates for the countries in which the Group earned profits
IAS 1281(d)
IAS 1281(h)
The applicable rate has changed following [describe the impact of any changes in the tax authorities tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period]
Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions
No tax charge or credit arose on the disposal of [name of subsidiary]
78
International GAAP Holdings Limited
Source International GAAP Holdings Limited
IAS 1281(c) The charge for the year can be reconciled to the profit before tax as follows
31122020 31122019
CU CU
Profit before tax on continuing operations
Tax at the [Land A] corporation tax rate of __ per cent (2019 __per cent
Tax effect of share of results of associates
Tax effect of expenses that are not deductible in determining taxable profit
Tax effect of income not taxable in determining taxable profit
Tax effect of utilisation of tax losses not previously recognised
Change in unrecognised deferred tax assets
Effect of different tax rates of subsidiaries operating in other jurisdictions
Tax expense for the year
IAS 1284
Commentary
The reconciliation should enable users of financial statements to understand whether the relationship between tax expense (income) and accounting profit is unusual and to understand the significant factors that could affect that relationship in the future Distinguishing between recurring and non‑recurring items may assist with this It is also informative to state the effective tax rate The relationship between tax expense (income) and accounting profit may be affected by such factors as revenue that is exempt from taxation expenses that are not deductible in determining taxable profit (tax loss) the effect of tax losses and the effect of foreign tax rates and it is useful to explain these items
IAS 1281(ab) In addition to the amount charged to profit or loss the following amounts relating to tax have been recognised in other comprehensive income
79
International GAAP Holdings Limited
Source International GAAP Holdings Limited
31122020 31122019
CU CU
Current tax
[describe items and split between those items that will not be reclassified subsequently to profit or loss and those items that may be reclassified subsequently to profit or loss]
Deferred tax
Items that will not be reclassified subsequently to profit or loss
Gains(losses) on property revaluation
Remeasurement of net defined benefit liability
Fair value gain(loss) on investments in equity instruments designated as at FVTOCI
Fair value gain(loss) on financial liabilities designated as at FVTPL attributable to changes in credit risk
Items that may be reclassified subsequently to profit or loss
Debt instruments measured at FVTOCI
Fair value gain(loss) on investments in debt instruments measured at FVTOCI
Less Cumulative (gain)loss on investments in debt instruments classified as at FVTOCI reclassified to profit or loss upon disposal
Less Cumulative (gain)loss on investments in debt instruments classified as at FVTOCI reclassified to profit or loss upon reclassification from FVTOCI to FVTPL
Cash flow hedges
Fair value gain(loss) arising on hedging instruments during the period
Less Cumulative (gain)loss arising on hedging instruments reclassified to profit or loss
Cost of hedging
Changes in the fair value during the period in relation to transaction related hedged items
Changes in the fair value during the period in relation to time-period related hedged items
Less Cumulative (gain)loss arising on changes in the fair value in relation to transaction-related hedged items reclassified to profit or loss
Less Amortisation to profit or loss of cumulative (gain)loss arising on changes in the fair value in relation to time-period related hedged item
Exchange differences on translation of foreign operations
Gains(losses) on net investment hedge
IAS 1281(a) Total income tax recognised in other comprehensive income
80
International GAAP Holdings Limited
Source International GAAP Holdings Limited
In addition to the amount charged to profit or loss and other comprehensive income the following amounts relating to tax have been recognised directly in equity
31122020 31122019
CU CU
Current tax
Excess tax deductions related to share-based payments on exercised options
Deferred tax
Initial recognition of the equity component on issue of convertible loan notes
Change in estimated excess tax deductions related to share-based payments
IAS 1281(a) Total income tax recognised directly in equity
81
International GAAP Holdings Limited
Source International GAAP Holdings Limited
IFRS 530 - 32 14 Discontinued operations
IFRS 533(b) IFRS 534
On [date] 2020 the Group entered into a sale agreement to dispose of [name of subsidiary] which carried out all of the Grouprsquos [___] operations The disposal was effected in order to generate cash flows for the expansion of the Grouprsquos other businesses The disposal was completed on [date] 2020 on which date control of [name of subsidiary] passed to the acquirer Details of the assets and liabilities disposed of and the calculation of the profit or loss on disposal are disclosed in note 53
The results of the discontinued operations which have been included in the profit for the year were as follows
Period ended [date] 2020
Year ended 31122019
CU CU
IFRS 533(b)(i) Revenue
IFRS 533(b)(i) Expenses
IFRS 533(b)(i) Profit before tax
IFRS 533(b)(ii) IAS 1281(h)
Attributable tax expense
IFRS 533(b)(iii) Loss on disposal of discontinued operations
IFRS 533(b)(iv) IAS 1281(h)
Attributable tax expense
IFRS 533(d) Net loss attributable to discontinued operations (attributable to owners of the Company)
IFRS 533(c)
IFRS 541 IFRS 538
During the year [name of subsidiary] contributed CU__ million (2019 CU__ million) to the Grouprsquos net operating cash flows paid CU__ million (2019 CU__ million) in respect of investing activities and paid CU__ million (2019 CU__ million) in respect of financing activities
A loss of CU__ million arose on the disposal of [name of subsidiary] being the difference between the proceeds of disposal and the carrying amount of the subsidiaryrsquos net assets and attributable goodwill
In addition on [date] the board resolved to dispose of the Grouprsquos [specify] operations and negotiations with several interested parties have subsequently taken place The disposal is consistent with the Grouprsquos long-term policy to focus its activities on the Grouprsquos other businesses These operations which are expected to be sold within 12 months have been classified as a disposal group held for sale and presented separately in the statement of financial position The proceeds of disposal are expected to substantially exceed the carrying amount of the related net assets and accordingly no impairment losses have been recognised on the classification of these operations as held for sale The major classes of assets and liabilities comprising the operations classified as held for sale are as follows
82
International GAAP Holdings Limited
Source International GAAP Holdings Limited
31122020
CU
Goodwill
Property plant and equipment
Inventories
Trade and other receivables
Cash and bank balances
Total assets classified as held for sale
Trade and other payables
Tax liabilities
Bank overdrafts and loans
Total liabilities associated with assets classified as held for sale
Net assets of disposal group
15 Dividends
31122020 31122019
CU CU
Amounts recognised as distributions to equity holders in the year
Final dividend for the year ended 31 December 2019 of CU__ (2018 CU__) per share
Interim dividend for the year ended 31 December 2020 of CU__ (2019 CU__) per share
IAS 1107 Proposed final dividend for the year ended 31 December 2020 of CU__ (2019 CU__) per share
IAS 1137(a) IAS 1013
The proposed final dividend is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability in these financial statements The proposed dividend is payable to all shareholders on the Register of Members on [insert date] The total estimated dividend to be paid is CU__ per share The payment of this dividend will not have any tax consequences for the Group
Under an arrangement dated [date] [name] who holds [number] ordinary shares representing __ per cent of the Companyrsquos called up share capital has agreed to waive all dividends due to [himher] for a period of [specify]
83
International GAAP Holdings Limited
Australian entities are required to provide additional information about frankingcredits See Note 15 in Appendix 2 for an illustrative example
Source International GAAP Holdings Limited
IAS 332 amp 3 16 Earnings per share
Commentary
IAS 33 requires that earnings per share (EPS) information be presented in the consolidated financial statements of a group with a parent (and in the separate or individual financial statements of an entity)
bull whose ordinary shares or potential ordinary shares are traded in a public market (a domestic or foreign stock exchange or an over‑the‑counter market including local or regional markets) or
bull that files or is in the process of filing its (consolidated) financial statements with a securities commission or other regulatory organisation for the purpose of issuing ordinary shares in a public market
If other entities choose to disclose EPS information voluntarily in their financial statements that comply with IFRS Standards the disclosures in relation to the EPS information should comply fully with the requirements set out in IAS 33
From continuing and discontinued operations
The calculation of the basic and diluted earnings per share is based on the following data
31122020 31122019
CU CU
IAS 3370(a) Earnings
Earnings for the purposes of basic earnings per share being net profit attributable to owners of the Company
Effect of dilutive potential ordinary shares
Interest on convertible loan notes (net of tax)
Earnings for the purposes of diluted earnings per share
31122020 31122019
Number of shares
IAS 3370(b) Weighted average number of ordinary shares for the purposes of basic earnings per share
IAS 3370(c) Effect of dilutive potential ordinary shares
Share options
Convertible loan notes
Weighted average number of ordinary shares for the purposes of diluted earnings per share
IAS 33 70(c)
The denominator for the purposes of calculating both basic and diluted earnings per share has been adjusted to reflect the capitalisation issue in 2020
The following potential ordinary shares are anti-dilutive and are therefore excluded from the weighted average number of ordinary shares for the purpose of diluted earnings per share
84
International GAAP Holdings Limited
Source International GAAP Holdings Limited
31122020 31122019
Number of shares
[Describe]
From continuing operations
31122020 31122019
CU CU
IAS 3370(a) Earnings
Net profit attributable to equity holders of the parent
Adjustments to exclude loss for the year from discontinued operations
Earnings from continuing operations for the purpose of basic earnings per share excluding discontinued operations
Effect of dilutive potential ordinary shares
Interest on convertible loan notes (net of tax)
Earnings from continuing operations for the purpose of diluted earnings per share excluding discontinued operations
The denominators used are the same as those detailed above for both basic and diluted earnings per share from continuing and discontinued operations
IAS 3368 IAS 3369
From discontinued operations
31122020 31122019
CU CU
Basic
Diluted
85
International GAAP Holdings Limited
Source International GAAP Holdings Limited
IAS 828(f)(ii) Impact of changes in accounting policy (see note 2)
Impact on profit for the year from continuing
operations
Impact on basic earnings per share
Impact on diluted earnings per share
31122020 31122019 31122020 31122019 31122020 31122019
CU CU CU CU CU CU
Changes in accounting policies relating to
[Specify relevant changes in accounting policy]
IAS 849(b)(ii) Impact of prior year errors (see note 2)
Impact on profit for the year from continuing
operations
Impact on basic earnings per share
Impact on diluted earnings per share
31122020 31122019 31122020 31122019 31122020 31122019
CU CU CU CU CU CU
Changes relating to prior period errors
[Specify relevant prior period error]
86
International GAAP Holdings Limited
Source International GAAP Holdings Limited
17 Goodwill
CU
Cost
At 1 January 2019
Exchange differences
Recognised on acquisition of a subsidiary
Derecognised on disposal of a subsidiary
Classified as held for sale
Other changes
IFRS 3B67(d) At 31 December 2019
Exchange differences
Recognised on acquisition of a subsidiary
Derecognised on disposal of a subsidiary
Classified as held for sale
Other changes
IFRS 3B67(d) At 31 December 2020
Accumulated impairment losses
At 1 January 2019
Exchange differences
IAS 36126 Impairment losses for the year
Eliminated on disposal of a subsidiary
IFRS 3B67(d) At 31 December 2019
Exchange differences
IAS 36126 Impairment losses for the year
Eliminated on disposal of a subsidiary
IFRS 3B67(d) At 31 December 2020
87
International GAAP Holdings Limited
Source International GAAP Holdings Limited
IFRS 3B67(d) Carrying amount
At 31 December 2020
At 31 December 2019
At 1 January 2019
IAS 36134 - 135 The carrying amount of goodwill has been allocated to CGUs as follows
31122020 31122019
CU CU
[Segment C] Electronic equipment ndash internet sales
[Segment E] Leisure goods ndash retail outlets
[Segment G] Construction operations ndash Alpha Construction
[Segment G] Construction operations ndash other
The Group tests goodwill annually for impairment or more frequently if there are indications that goodwill might be impaired
Electronic equipment ndash internet sales
The recoverable amount of the lsquoelectronic equipment ndash internet salesrsquo segment as a cash-generating unit is determined based on a value in use calculation which uses cash flow projections based on financial budgets approved by the directors covering a five-year period and a pre-tax discount rate of _per cent per annum (2019 _per cent per annum) calculated by [describe method used to determine the discount rate]
The key assumptions used by management in setting the financial budgets for the initial five-year period were as follows
Forecast sales growth rates
Forecast sales growth rates are based on past experience adjusted for [discuss reasons for adjusting the historic measures for example salesmarket trends and the strategic decisions made in respect of the cash-generating unit]
Operating profits
Operating profits are forecast based on historical experience of operating margins adjusted for the impact of [describe reasons for adjusting the historical measures for example changes to product costs and cost saving initiatives]
Cash conversion
Cash conversion is the ratio of operating cash flow to operating profit Management forecasts cash conversion rates based on historical experience
Cash flows beyond that five-year period have been extrapolated using a steady __per cent (2019 __per cent) per annum growth rate This growth rate exceeds by __ percentage points the long-term average growth rate for the international electronic equipment market However among other factors the internet sales cash-generating unit benefits from the protection of a 20-year patent on the Series Z electronic equipment granted in 2014 which is still acknowledged as one of the top models in the market
88
International GAAP Holdings Limited
Source International GAAP Holdings Limited
The steady growth rate of __per cent is estimated by the directors of the Company based on past performance of the cash-generating unit and their expectations of market development The directors estimate that a decrease in growth rate by _per cent to _per cent would reduce the headroom in the cash-generating unit to nil but would not result in an impairment charge
Leisure goods ndash retail outlets
The recoverable amount of this cash-generating unit is determined based on a value in use calculation which uses cash flow projections based on financial budgets approved by the directors covering a five-year period and a pre-tax discount rate of _per cent per annum (2019 _per cent per annum) calculated by [describe method used to determine the discount rate]
The key assumptions used by management in setting the financial budgets for the initial five-year period were as follows
Forecast sales growth rates
Forecast sales growth rates are based on past experience adjusted for [discuss reasons for adjusting the historic measures for example salesmarket trends and the strategic decisions made in respect of the cash-generating unit]
Operating profits
Operating profits are forecast based on historical experience of operating margins adjusted for the impact of [describe reasons for adjusting the historical measures for example changes to product costs and cost saving initiatives]
Cash conversion
Cash conversion is the ratio of operating cash flow to operating profit Management forecasts cash conversion rates based on historical experience
Cash flow projections during the budget period are based on the same expected gross margins and inventory price inflation throughout the budget period The cash flows beyond that five-year period have been extrapolated using a steady _per cent (2019 _per cent) per annum growth rate which is the projected long-term average growth rate for the international leisure goods market
Construction operations ndash Alpha Construction
The goodwill associated with Alpha Construction arose when that business was acquired by the Group in 2012 The business has continued to operate on a satisfactory basis but without achieving any significant increase in market share
During the year the government of [A Land] introduced new regulations requiring registration and certification of builders for government contracts In the light of the decision to focus the Grouprsquos construction activities through the other operating units in Subsidiary C Limited the directors have decided not to register Alpha Construction for this purpose which means that it has no prospects of obtaining future contracts The directors have consequently determined to write off the goodwill directly related to Alpha Construction amounting to CU__ No other write-down of the assets of Alpha Construction is considered necessary Contracts in progress at the end of the year will be completed without loss to the Group The recoverable amount of the Alpha Construction cash-generating unit amounted to CU__ as at 31 December 2020
The impairment loss has been included in profit or loss in the [other expensescost of sales] line item
Construction operations ndash other
The recoverable amount of the Grouprsquos remaining construction operations has been determined based on a value in use calculation which uses cash flow projections based on financial budgets approved by the directors covering a five-year period and a pre-tax discount rate of _per cent per annum (2019 _per cent per annum) calculated by [describe method used to determine the discount rate]
89
International GAAP Holdings Limited
Source International GAAP Holdings Limited
The key assumptions used by management in setting the financial budgets for the initial five-year period were as follows
Forecast sales growth rates
Forecast sales growth rates are based on past experience adjusted for [discuss reasons for adjusting the historic measures for example salesmarket trends and the strategic decisions made in respect of the cash-generating unit]
Operating profits
Operating profits are forecast based on historical experience of operating margins adjusted for the impact of [describe reasons for adjusting the historical measures for example changes to product costs and cost saving initiatives]
Cash conversion
Cash conversion is the ratio of operating cash flows to operating profit Management forecasts cash conversion rates based on historical experience
Cash flows beyond that five-year period have been extrapolated using a steady _per cent (2019 _per cent) per annum growth rate This growth rate does not exceed the long-term average growth rate for the construction market in [A Land]
Sensitivity analysis
The Group has conducted an analysis of the sensitivity of the impairment test to changes in the key assumptions used to determine the recoverable amount for each of the group of CGUs to which goodwill is allocated The directors believe that any reasonably possible change in the key assumptions on which the recoverable amount of lsquoElectronic equipment ndash internet salesrsquo and lsquoConstruction operations ndash otherrsquo is based would not cause the aggregate carrying amount to exceed the aggregate recoverable amount of the related CGUs
At the beginning of the financial year the recoverable amount of lsquoLeisure goods ndash retail outletsrsquo was substantially in excess of its book value Due to current market conditions at the year-end as discussed in note 4 the recoverable amount is closer to book value
A __per cent underperformance against forecast sales growth rates for lsquoLeisure goods ndash retail outletsrsquo is considered reasonably possible based on recent experience and would lead to an impairment charge of CU__
A __per cent underperformance against forecast sales growth rates would reduce the headroom in lsquoLeisure goods ndash retail outletsrsquo to nil but would not result in an impairment charge
90
International GAAP Holdings Limited
Source International GAAP Holdings Limited
18 Other intangible assets
Capitalised development costs
Patents and trademarks Total
CU CU CU
IAS 38118(c) IAS 38118(e)
Cost
At 1 January 2019
Exchange differences
Additions from internal development
At 31 December 2019
Exchange differences
Additions from internal development
Additions from separate acquisitions
Acquired on acquisition of a subsidiary
At 31 December 2020
IAS 38118(c) IAS 38118(e)
Amortisation
At 1 January 2019
Exchange differences
Charge for the year
At 31 December 2019
Exchange differences
Charge for the year
At 31 December 2020
Carrying amount
At 31 December 2020
At 31 December 2019
At 1 January 2019
IAS 38122(b)
The amortisation period for development costs incurred on the Grouprsquos [specify] development is [number] years
Patents and trademarks are amortised over their estimated useful lives which is on average [number] years
The Group holds a patent for the manufacture of its Z Series Electronic Equipment The carrying amount of the patent of CU__ million (2019 CU__ million) will be fully amortised in __ years (2019 __ years)
91
International GAAP Holdings Limited
Source International GAAP Holdings Limited
19 Property plant and equipment
Land and buildings
Plant and machinery
Fixtures and fittings Total
CU CU CU CU
Cost or valuation
At 1 January 2019
Additions
Acquisition of subsidiary
Exchange differences
Disposals
Revaluation increase
IAS 1673(d) - (e) At 31 December 2019
Additions
Acquisition of subsidiary
Exchange differences
Reclassified as held for sale
Revaluation increase
Transferred to investment property
IAS 1673(d) - (e) At 31 December 2020
Comprising
At cost
At valuation 2020
Accumulated depreciation and impairment
At 1 January 2019
Charge for the year
Impairment loss
Exchange differences
Eliminated on disposals
92
International GAAP Holdings Limited
Source International GAAP Holdings Limited
Eliminated on revaluation
IAS 1673(d) - (e) At 31 December 2019
Charge for the year
IAS 36126 Impairment loss
Exchange differences
On assets reclassified as held for sale
Eliminated on revaluation
Transferred to investment property
IAS 1673(d) - (e) At 31 December 2020
Carrying amount
At 31 December 2020
At 31 December 2019
At 1 January 2019
IFRS 1695
Commentary
Although not illustrated in these Model Financial Statements for items of property plant and equipment which are subject to an operating lease a lessor should apply the disclosure requirements of IAS 16
For this purpose each class of property plant and equipment should be segregated into assets subject to operating leases and assets not subject to operating leases (ie the disclosures required by IAS 16 should be provided separately for assets subject to an operating lease (by class of underlying asset) and owned assets held and used by the lessor
Fair value measurement of the Grouprsquos freehold land and buildings
The Grouprsquos freehold land and buildings are stated at their revalued amounts being the fair value at the date of revaluation less any subsequent accumulated depreciation and subsequent accumulated impairment losses The fair value measurements of the Grouprsquos freehold land and buildings as at 31 December 2020 and 31 December 2019 were performed by [Name of valuers] independent valuers not related to the Group [Name of valuers] are members of the Institute of Valuers of __________ and they have appropriate qualifications and recent experience in the fair value measurement of properties in the relevant locations The valuation conforms to International Valuation Standards and was based on recent market transactions on armrsquos length terms for similar properties
The fair value of the freehold land was determined based on the market comparable approach that reflects recent transaction prices for similar propertiesother methods [describe]
The fair value of the buildings was determined using the cost approach that reflects the cost to a market participant to construct assets of comparable utility and age adjusted for obsolescenceother methods [describe] [Describe the valuation techniques and the inputs used in determining the fair value]
There has been no change to the valuation technique during the year
93
International GAAP Holdings Limited
Source International GAAP Holdings Limited
IFRS 1393(a) - (b) Details of the Grouprsquos freehold land and buildings and information about the fair value hierarchy as at the end of the reporting period are as follows
Level 2 Level 3Fair value as at
31122020
CU CU CU
A manufacturing plant in X Land contains
Freehold land
Buildings
Level 2 Level 3Fair value as at
31122019
CU CU CU
A manufacturing plant in X Land contains
Freehold land
Buildings
Commentary
The categorisation of fair value measurements into the different levels of the fair value hierarchy depends on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement The above categorisations are for illustrative purpose only It is worth noting the following points
bull The classification into the 3‑level hierarchy is not an accounting policy choice For land and buildings given their unique nature it is extremely rare that the fair value measurement would be identified as a Level 1 measurement Whether the fair value measurement in its entirety should be classified into Level 2 or Level 3 would depend on the extent to which the inputs and assumptions used in arriving at the fair value are observable In many situations where valuation techniques (with significant unobservable inputs) are used in estimating the fair value of the real estate properties the fair value measurement as a whole would be classified as Level 3
bull The level within which the fair value measurement is categorised bears no relation to the quality of the valuation For example the fact that a real estate property is classified as a Level 3 fair value measurement does not mean that the property valuation is not reliable ndash it merely indicates that significant unobservable inputs have been used and significant judgement was required in arriving at the fair value
IFRS 1395
Commentary
Where there had been a transfer between different levels of the fair value hierarchy the Group should disclose the reasons for the transfer and the Grouprsquos policy for determining when transfers between levels are deemed to have occurred (for example at the beginning or end of the reporting period or at the date of the event that caused the transfer)
94
International GAAP Holdings Limited
Source International GAAP Holdings Limited
IAS 1677(e) Had the Grouprsquos freehold land and buildings (other than land and buildings classified as held for sale or included in a disposal group) been measured on a historical cost basis their carrying amount would have been as follows
As at 31122020 As at 31122019
CU CU
Freehold land
Buildings
The revaluation surplus is disclosed in note 44 The revaluation surplus arises in a subsidiary and cannot be distributed to the parent due to legal restrictions in the country of incorporation
At 31 December 2020 the Group had entered into contractual commitments for the acquisition of property plant and equipment amounting to CU__ million (2019 CU__ million)
Impairment losses recognised during the year
IAS 36130(a) - (g)
IAS 36131
IAS 36126(a)
During the year as the result of the unexpected poor performance of a manufacturing plant the Group carried out a review of the recoverable amount of that manufacturing plant and the related equipment The poor performance of the plant can be attributed to [insert description of reasons for poor performance for example this could include whether the impairment loss was prompted by external data or changes in the Companyrsquos own estimates]
These assets are used in the Grouprsquos [name segment] reportable segment The review led to the recognition of an impairment loss of CU__ which has been recognised in profit or loss The Group also estimated the fair value less costs of disposal of the manufacturing plant and the related equipment which is based on the recent market prices of assets with similar age and obsolescence The fair value less costs of disposal is less than the value in use and hence the recoverable amount of the relevant assets has been determined on the basis of their value in use The manufacturing plant and the related equipment were impaired to their recoverable amount based on value in use of CU__ which is their carrying value at year end
The discount rate used in measuring value in use was __ per cent per annum No impairment assessment was performed in 2019 as there was no indication of impairment
Additional impairment losses recognised in respect of plant and machinery in the year amounted to CU__ million These losses are attributable to greater than anticipated wear and tear Those assets have been impaired in full and they belong to the Grouprsquos [name segment] reportable segment
The impairment losses have been included in the profit and loss in the [other expensescost of sales] line item
The impairment loss on fixtures and equipment arose in connection with the restructuring following the disposal of [specifyprovide cross-reference]
IAS 1674(a) Assets pledged as security
Freehold land and buildings with a carrying amount of CU__ million (2019 CU__ million) have been pledged to secure borrowings of the Group (see note 33) The Group is not allowed to pledge these assets as security for other borrowings or to sell them to another entity
95
International GAAP Holdings Limited
Source International GAAP Holdings Limited
IFRS 1696 20 Investment property
CU
Fair value
At 1 January 2019
Additions
Exchange differences
Disposals
Increase in fair value during the year
IAS 4076 At 31 December 2019
Additions
Exchange differences
Disposals
Increase in fair value during the year
Transferred from property plant and equipment
IAS 4076 At 31 December 2020
IAS 4075(e)
IFRS 1391(a) IFRS 1393(d)
IFRS 1393(b)
The fair value of the Grouprsquos investment property at 31 December 2020 has been arrived at on the basis of a valuation carried out at that date by [Name of valuers] independent valuers not connected with the Group The valuation conforms to International Valuation Standards The fair value was determined [based on the market comparable approach that reflects recent transaction prices for similar propertiesother methods [describe]]
In estimating the fair value of the properties the highest and best use of the properties is their current use [Describe the valuation technique and inputs used in the fair value measurement]
There has been no change to the valuation technique during the year
Details of the Grouprsquos investment properties and information about the fair value hierarchy as at the end of the reporting period are as follows
Level 2 Level 3Fair value as at
31122020
CU CU CU
Commercial units located in A Land ndash BB City
Office units located in A Land ndash CC City
Residential units located in A Land ndash DD City
Total
96
International GAAP Holdings Limited
Source International GAAP Holdings Limited
Level 2 Level 3Fair value as at
31122019
CU CU CU
Commercial units located in A Land ndash BB City
Office units located in A Land ndash CC City
Residential units located in A Land ndash DD City
Total
IFRS 1393(c)
Commentary
Where there had been a transfer between the different levels of the fair value hierarchy the Group should disclose the reasons for the transfer and the Grouprsquos policy for determining when transfers between levels are deemed to have occurred (for example at the beginning or end of the reporting period or at the date of the event that caused the transfer)
The Group shall transfer a property to or from investment property when and only when there is evidence of a change in use A change of use occurs if property meets or ceases to meet the definition of investment property A change in managementrsquos intentions for the use of a property by itself does not constitute evidence of a change in use
Commentary
Fair value hierarchy
The categorisation of fair value measurements into the different levels of the fair value hierarchy depends on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement The above categorisations are for illustrative purposes only It is worth noting the following points
bull The classification into the 3‑level hierarchy is not an accounting policy choice For land and buildings given their unique nature it is extremely rare that the fair value measurement would be identified as a Level 1 measurement Whether the fair value measurement in its entirety should be classified into Level 2 or Level 3 would depend on the extent to which the inputs and assumptions used in arriving at the fair value are observable In many situations where valuation techniques (with significant unobservable inputs) are used in estimating the fair value of the real estate properties the fair value measurement as a whole would be classified as Level 3
bull The level within which the fair value measurement is categorised bears no relation to the quality of the valuation For example the fact that a real estate property is classified as a Level 3 fair value measurement does not mean that the property valuation is not reliable ndash it merely indicates that significant unobservable inputs have been used and significant judgement was required in arriving at the fair value
Fair value disclosures for investment properties measured using the cost model
For investment properties that are measured using the cost model IAS 4079(e) requires the fair value of the properties to be disclosed in the notes to the financial statements In that case the fair value of the properties (for disclosure purpose) should be measured in accordance with IFRS 13 In addition IFRS 1397 requires the following disclosures
bull the level in which fair value measurement is categorised (ie Level 1 2 or 3)
bull when the fair value measurement is categorised within Level 2 or Level 3 a description of the valuation technique(s) and the inputs used in the fair value measurement and
bull the highest and best use of the properties (if different from their current use) and the reasons why the properties are being used in a manner that is different from their highest and best use
97
International GAAP Holdings Limited
Source International GAAP Holdings Limited
IFRS 1393(d)
IFRS 1393(d)
IFRS 1393(h)(i)
Valuation technique(s)
Significant unobservable input(s) Sensitivity
Commercial property units located in Land X ndash CC City
Income Capitalisation Approach
Capitalisation rate taking into account the capitalisation of rental income potential nature of the property and prevailing market condition of _per cent - _per cent (2019 _per cent - _per cent)
A slight increase in the capitalisation rate used would result in a significant decrease in fair value and vice versa
Monthly market rent taking into account the differences in location and individual factors such as frontage and size between the comparables and the property at an average of CU_ (2019 CU_) per square metre (ldquosqmrdquo) per month
A significant increase in the market rent used would result in a significant increase in fair value and vice versa
Commentary
In considering the level of disaggregation of the properties for the above disclosure management of the entity should take into account the nature and characteristics of the properties in order to provide meaningful information to the users of the financial statements regarding the fair value measurement information of the different types of properties The breakdown above is for illustrative purposes only
As illustrated above for fair value measurements categorised within Level 3 of the fair value hierarchy an entity provides quantitative information about the significant unobservable inputs used in the fair value measurement An entity is not required to create quantitative information to comply with this disclosure requirement if quantitative unobservable inputs are not developed by the entity when measuring fair value (eg when an entity uses prices from prior transactions or third‑party pricing information without adjustment) However when providing this disclosure an entity cannot ignore quantitative unobservable inputs that are significant to the fair value measurement and are reasonably available to the entity
IAS 4075(f)
IAS 4075(h)
The Group has pledged all of its investment property to secure general banking facilities granted to the Group
The property rental income earned by the Group from its investment property all of which is leased out under operating leases amounted to CU__ million (2019 CU__ million) Direct operating expenses arising on the investment property all of which generated rental income in the year amounted to CU__ million (2019 CU__ million)
The Group has entered into a contract for the maintenance of its investment property for the next five years which will give rise to an annual charge of CU__ million
98
International GAAP Holdings Limited
Source International GAAP Holdings Limited
21 Subsidiaries
Commentary
IFRS Standards do not explicitly require an entity to disclose a list of its subsidiaries in the consolidated financial statements Nevertheless local laws or regulations may require an entity to make such a disclosure The disclosure below is for information only and may have to be modified to comply with the additional local requirements
IFRS 1210(a)(i) IFRS 124 IFRS 12B4(a) IFRS 12B5-B6
Information about the composition of the Group at the end of the reporting period is as follows
Principal activity Place of incorporation and operation Number of wholly-owned subsidiaries
31122020 31122019
[Insert Activity X] [A Land]
[Insert Activity Y] [B Land]
Principal activity Place of incorporation and operationNumber of non-wholly-owned subsidiaries
31122020 31122019
[Insert Activity X] [A Land]
[Insert Activity Y] [B Land]
IFRS 1210(a)(ii) IFRS 1212(a) - (f)IFRS 12B11
The table below shows details of non-wholly owned subsidiaries of the Group that have material non-controlling interests
Commentary
For illustrative purposes the following non‑wholly owned subsidiaries are assumed to have non‑controlling interests that are material to the Group The amounts disclosed should not reflect the elimination of intragroup transactions
99
International GAAP Holdings Limited
Entities applying ASIC Corporations (Wholly-owned Companies) Instrument2016785 or with tax-consolidated groups may need to provide additionalinformation See the example in Note 21 in Appendix 2
Source International GAAP Holdings Limited
Name of subsidiary
Principal place of business and place of incorporation
Proportion of ownership interests and voting rights held by non-controlling interests
Profit (loss) allocated to non-controlling interests for the year Non-controlling interests
31122020 31122019 31122020 31122019 31122020 31122019
CU CU CU CU
Subsidiary A Limited (i)
[A Land]
Subsidiary B Limited (ii)
[B Land]
Individually immaterial subsidiaries with non-controlling interests
Total
IFRS 129(b) (i) The Group owns __ per cent of the equity shares of Subsidiary A Limited However based on the contractual arrangements between the Group and other investors the Group has the power to appoint and remove the majority of the board of directors of Subsidiary A Limited The relevant activities of Subsidiary A Limited are determined by the board of directors of Subsidiary A Limited based on simple majority votes Therefore the directors of the Group concluded that the Group has control over Subsidiary A Limited and Subsidiary A Limited is consolidated in these financial statements
(ii) Subsidiary B Limited is listed on the stock exchange of [B Land] Although the Group has only __ per cent ownership in Subsidiary B Limited the directors concluded that the Group has a sufficiently dominant voting interest to direct the relevant activities of Subsidiary B Limited on the basis of the Grouprsquos absolute size of shareholding and the relative size of and dispersion of the shareholdings owned by other shareholders The __ per cent ownership interests in Subsidiary B Limited are owned by thousands of shareholders that are unrelated to the Group none individually holding more than __ per cent
IFRS 1213
IFRS 1218
The reconciliation of non-controlling interests in note 52 includes an analysis of the profit or loss allocated to non-controlling interests of each subsidiary where the non-controlling interest is material
There are no significant restrictions on the ability of the Group to access or use assets and settle liabilities
During the year the Group disposed of a __ per cent of its interest in [name of subsidiary] The proceeds on disposal of CU__ million were received in cash An amount of CU__ million (being the proportion share of the carrying amount of net assets in [name of subsidiary] has been transferred to non-controlling interests (see note 52) The gain on disposal of [name of subsidiary] is disclosed in note 53 No investment was retained in the former subsidiary The gain on disposal is included in the loss on discontinued operations which is analysed in note 15
IFRS 1214 - 17
Commentary
When the Group gives financial support to a consolidated structured entity the nature and risks (including the type and amount of support provided) should be disclosed in the financial statements Please see IFRS 1215 for details
100
International GAAP Holdings Limited
Source International GAAP Holdings Limited
22 Associates
IFRS 1221(a) Details of material associates
Details of each of the Grouprsquos material associates at the end of the reporting period are as follows
Commentary
For illustrative purposes the following associates are assumed to be material to the group
Name of associate Principal activity
Place of incorporation and principal place of business
Proportion of ownership interest and voting rights held by the Group
31122020 31122019
Associate A Limited (i) amp (ii)
[insert activity X] [A Land]
Associate B Limited (iii) [insert activity Y ] [B Land]
IFRS 1221(b)(i)
IFRS 1221(a)(iv)
IFRS 1222(b) IFRS 1221(b)(III) IFRS 1397
IFRS 129(e)
All of the above associates are accounted for using the equity method in these consolidated financial statements as set out in the Grouprsquos accounting policies in note 3
(i) Pursuant to a shareholder agreement the Company has the right to cast __ per cent of the votes at shareholder meetings of Associate A Limited
(ii) The financial year end date of Associate A Limited is 31 October This was the reporting date established when that entity was incorporated and a change of reporting date is not permitted in [A Land] For the purposes of applying the equity method of accounting the financial statements of Associate A Limited for the year ended 31 October 2020 have been used and appropriate adjustments have been made for the effects of significant transactions between that date and 31 December 2020 As at 31 December 2020 the fair value of the Grouprsquos interest in Associate A Limited which is listed on the stock exchange of [A Land] was CU__ million (2019 CU__ million) based on the quoted market price available on the stock exchange of [A Land] which is a Level 1 input in terms of IFRS 13
(iii) Although the Group holds less than __ per cent of the equity shares of Associate B Limited and it has less than __ per cent of the voting power at shareholder meetings the Group exercises significant influence by virtue of its contractual right to appoint two out of seven directors to the board of directors of that entity
IFRS 1221(b)(ii) IFRS 12B12 IFRS 12B14(a)
Dividends received from associates below represent the actual amounts attributable and hence received by the Group The other summary information that precedes the reconciliation to the Grouprsquos carrying amount represents amounts included in the IFRS financial statements of the associate not the entityrsquos share of these amounts although they are adjusted to reflect fair value adjustments upon acquisition or accounting policy alignments
Summarised financial information in respect of each of the Grouprsquos material associates is set out below The summarised financial information below represents amounts in associatesrsquo financial statements prepared in accordance with IFRS Standards [adjusted by the Group for equity accounting purposes]
101
International GAAP Holdings Limited
Source International GAAP Holdings Limited
Associate A Limited Associate B Limited
31122020 31122019 31122020 31122019
CU CU CU CU
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Equity attributable to owners of the Company
Non-controlling interest
Revenue
Profit or loss from continuing operations
Post-tax profit(loss) from discontinued op-erations
Profit(loss) for the year
Other comprehensive income attributable to the owners of the Company
Total comprehensive income
Dividends received from the associate during the year
102
International GAAP Holdings Limited
Source International GAAP Holdings Limited
IFRS 12B14(b) Reconciliation of the above summarised financial information to the carrying amount of the interest in Associate A Limited and Associate B Limited recognised in the consolidated financial statements
Associate A Limited Associate B Limited
31122020 31122019 31122020 31122019
CU CU CU CU
Net assets of associate
Proportion of the Grouprsquos ownership interest in the associate
Goodwill
Other adjustments (please specify)
Carrying amount of the Grouprsquos interest in the associate
IFRS 1221(c)(ii) IFRS 12B16
Aggregate information of associates that are not individually material
31122020 31122019
CU CU
The Grouprsquos share of profit(loss) from continuing operations
The Grouprsquos share of post-tax profit(loss) from discontinued operations
The Grouprsquos share of other comprehensive income
The Groups share of total comprehensive income
Aggregate carrying amount of the Grouprsquos interests in these associates
Unrecognised share of losses of an associate
31122020 31122019
CU CU
IFRS 1222(c) The unrecognised share of loss of an associate for the year
Cumulative share of loss of an associate
103
International GAAP Holdings Limited
Source International GAAP Holdings Limited
IAS 2822 Change in the Grouprsquos ownership interest in an associate
In the prior year the Group held a __ per cent interest in E Plus Limited and accounted for the investment as an associate In December 2020 the Group disposed of a __ per cent interest in E Plus Limited to a third party for proceeds of CU__ million (received in January 2021) The Group has accounted for the remaining __ per cent interest as a financial asset at FVTOCI whose fair value at the date of disposal was CU__ which was determined using a discounted cash flow model [describe key factors and assumptions used in determining the fair value] This transaction has resulted in the recognition of a gain in profit or loss calculated as follows
CU
Proceeds of disposal
Plus fair value of investment retained (__per cent)
Less carrying amount of investment on the date of loss of significant influence
Gain recognised
The gain recognised in the current year comprises a realised profit of CU__ (being the proceeds of CU__ less CU__ carrying amount of the interest disposed of) and an unrealised profit of CU__ (being the fair value less the carrying amount of the __ per cent interest retained) A current tax expense of CU__ arose on the gain realised in the current year and a deferred tax expense of CU__ has been recognised in respect of the portion of the profit recognised that is not taxable until the remaining interest is disposed of
IFRS 1222(a) Significant restriction
Commentary
When there are significant restrictions on the ability of associates to transfer funds to the Group in form of cash dividends or to repay loans or advances made by the Group the Group should disclose the nature and extent of significant restrictions in the financial statements
104
International GAAP Holdings Limited
Source International GAAP Holdings Limited
23 Joint ventures
Commentary
In these model financial statements the Group only has one joint venture JV A Limited and for illustrative purposes JV A Limited is assumed to be material to the Group
IFRS 1221(a) Details of material joint ventures
Details of each of the Grouprsquos material joint ventures at the end of the reporting period are as follows
Name of associate Principal activity
Place of incorporation and principal place of business
Proportion of ownership interest and voting rights held by the Group
31122020 31122019
JV A Limited [insert Activity X] [A Land]
IFRS 1221(b)(i)
IFRS 1221(b)(ii) IFRS 12B12 IFRS 12B14(a)
All of the above joint ventures are accounted for using the equity method in these consolidated financial statements as set out in the Grouprsquos accounting policies in note 3
Summarised financial information in respect of each of the Grouprsquos material joint ventures is set out below The summarised financial information below represents amounts in joint ventures financial statements prepared in accordance with IFRS Standards [adjusted by the Group for equity accounting purposes]
JV A Limited
31122020 31122019
CU CU
Current assets
Non-current assets
Current liabilities
Non-current liabilities
IFRS 12B13 The above amounts of assets and liabilities include the following
Cash and cash equivalents
Current financial liabilities (excluding trade and other payables and provisions)
Non-current financial liabilities (excluding trade and other payables and provisions)
Revenue
Profit or loss from continuing operations
105
International GAAP Holdings Limited
Source International GAAP Holdings Limited
Post-tax profit(loss) from discontinued operations
Profit(loss) for the year
Other comprehensive income attributable to the owners of the Company
Total comprehensive income
Dividends received from the joint ventures during the year
IFRS 12B12 The above profit (loss) for the year include the following
Depreciation and amortisation
Interest income
Interest expense
Income tax expense (income)
IFRS 12B14(b) Reconciliation of the above summarised financial information to the carrying amount of the interest in the joint venture recognised in the consolidated financial statements
JV A Limited
31122020 31122019
CU CU
Net assets of joint venture
Proportion of the Grouprsquos ownership interest in the joint venture
Goodwill
Other adjustments [please specify]
Carrying amount of the Grouprsquos interest in the joint venture
106
International GAAP Holdings Limited
Source International GAAP Holdings Limited
IFRS 1221(c)(ii) IFRS 12B16
Aggregate information of joint ventures that are not individually material
31122020 31122019
CU CU
The Grouprsquos share of profit(loss) from continuing operations
The Grouprsquos share of post-tax profit(loss) from discontinued operations
The Grouprsquos share of other comprehensive income
The Grouprsquos share of total comprehensive income
Aggregate carrying amount of the Grouprsquos interests in these joint ventures
31122020 31122019
CU CU
IFRS 1222(c) The unrecognised share of loss of a joint venture for the year
Cumulative share of loss of a joint venture
IFRS 1222(a) Significant restriction
Commentary
When there are significant restrictions on the ability of joint ventures to transfer funds to the Group in form of cash dividends or to repay loans or advances made by the Group the Group should disclose the nature and extent of significant restrictions in the financial statements
107
International GAAP Holdings Limited
Source International GAAP Holdings Limited
IFRS 1221(a) 24 Joint operations
The Group has a material joint operation Project ABC The Group has a __ per cent share in the ownership of a property located in Central District City A The property upon completion will be held for leasing purposes The Group is entitled to a proportionate share of the rental income received and bears a proportionate share of the joint operationrsquos expenses
25 Investments
Current Non-Current
31122020 31122019 31122020 31122019
CU CU CU CU
IFRS 78(h) Investments in debt instruments classified as at FVTOCI (i)
Corporate bonds
IFRS 78(h) Investments in equity instruments designated as at FVTOCI (ii)
IFRS 711A(a) - (c) Shares
IFRS 78(a) Financial assets mandatorily measured at FVTPL (iii)
Shares
IFRS 78(f) Financial assets measured at amortised cost (iv)
Bills of exchange
Debentures
Redeemable notes
Loans to associates
Loan to joint venture
Loans to other entities
Loss allowance ( ) ( ) ( ) ( )
Total Investments
108
International GAAP Holdings Limited
Source International GAAP Holdings Limited
IFRS 711A(a) - (c) IFRS 742J(a)
IFRS 711B
(i) The investments in listed corporate bond issued by [name of entity] are paying __ per cent of interest per annum and the bonds will mature on [insert date] At maturity the Group will receive nominal amount of CU___ The corporate bonds are held by the Group within a business model whose objective is both to collect their contractual cash flows which are solely payments of principal and interest on the principal amount outstanding and to sell these financial assets Hence the corporate bonds are classified as at FVTOCI See below for impairment assessment
(ii) The Group holds __ per cent of the ordinary share capital of Rocket Corp Limited an entity involved in the refining and distribution of fuel products The directors of the Company do not consider that the Group is able to exercise significant influence over Rocket Corp Limited as the other __ per cent of the ordinary share capital is held by one shareholder who also manages the day-to-day operations of that entity The fair value of the investment was CU__ (2019 CU__) At 31 December 2020 the Group also continues to hold a __ per cent interest in E Plus Limited a former associate The fair value of the investment was CU__ (2019 CU__) The valuation methodology for these investments is disclosed in note 63(a)(i) The dividends received in respect of these investments are disclosed in note 10 These investments in equity instruments are not held for trading Instead they are held for medium to long-term strategic purposes Accordingly the directors of the Company have elected to designate these investments in equity instruments as at FVTOCI as they believe that recognising short-term fluctuations in these investmentsrsquo fair value in profit or loss would not be consistent with the Grouprsquos strategy of holding these investments for long-term purposes and realising their performance potential in the long run Apart from the disposal of __ per cent of E Plus Limited as disclosed in note 22 which resulted in the Grouprsquos loss of significance influence there over no other shares have been disposed of during the current reporting period
(iii) The Group has also invested in a portfolio of listed shares which are held for trading
(iv) The bills of exchange have maturity dates ranging between __ to __ months from the reporting date and return a variable rate of interest The weighted average interest rate on these securities is __ per cent per annum (2019 __ per cent per annum) The counterparties have a minimum A credit rating See below for impairment assessment The debentures return interest of __ per cent per annum payable monthly and mature on [date] The counterparties have a minimum BBB- credit rating See below for impairment assessment The Group holds listed redeemable notes returning __ per cent per annum The notes are redeemable at par value on [date] The notes are held with a single counterparty with an AA credit rating The Group holds no collateral over these notes See below for impairment assessment The Group has provided its associates with short-term loans at rates comparable to the average commercial rate of interest Further information about these loans is contained in note 65 See below for impairment assessment The Group has provided a joint venture JV A Limited with a long-term loan which forms part of the net investment in the joint venture The loan is repayable in 2070 and interest of __ per cent is receivable annually The Group does not apply the equity method of accounting to this instrument because it does not entitle the Group to the share of net assets of the joint venture As the loan settlement is neither planned nor likely to occur in the foreseeable future for the purpose of accounting for losses of JV A Limited the loan would form part of the Grouprsquos net investment Therefore any losses recognised using the equity method in excess of the Grouprsquos investment in ordinary shares of JV A Limited will be applied to the long-term loan The loan is held by the Group within a business model whose objective is to collect contractual cash flows which are solely payments of principal and interest on the principal amount outstanding Hence the loan to the joint venture is classified at amortised cost See below for impairment assessment The bills of exchange debentures redeemable notes and short-term loan to associates and loans to other parties are held by the Group within a business model whose objective is to collect their contractual cash flows which are solely payments of principal and interest on the principal amount outstanding Hence all of those financial assets are classified as at amortised cost The fair value of the investments carried at amortised cost is disclosed in note 63(a)
109
International GAAP Holdings Limited
Source International GAAP Holdings Limited
Impairment of financial assets
IFRS 735F(a)(i) IFRS 735G
IFRS 735F(a) IFRS 735G(c)
IFRS 735M
For the purposes of impairment assessment the corporate bonds investments in redeemable notes bills of exchange and debentures are considered to have low credit risk as the counterparties to these investments have a minimum BBB- credit rating Accordingly for the purpose of impairment assessment for these financial assets the loss allowance is measured at an amount equal to 12-month ECL As for the loans to related and other parties lifetime ECL was provided for them upon initial application of IFRS 9 until these financial assets are derecognised as it was determined on initial application of IFRS 9 that it would require undue cost and effort to determine whether their credit risk has increased significantly since initial recognition to the date of initial application of IFRS 9 For any new loans to related or third parties which are not purchased or originated credit-impaired financial assets the impairment loss is recognised as 12-month ECL on initial recognition of such instruments and subsequently the Group assesses whether there was a significant increase in credit risk
In determining the expected credit losses for these assets the directors of the Company have taken into account the historical default experience the financial position of the counterparties as well as the future prospects of the industries in which the issuers of the redeemable notes bills of exchange and debentures operate obtained from economic expert reports financial analyst reports and considering various external sources of actual and forecast economic information as appropriate in estimating the probability of default of each of these financial assets occurring within their respective loss assessment time horizon as well as the loss upon default in each case
There has been no change in the estimation techniques or significant assumptions made during the current reporting period in assessing the loss allowance for these financial assets
Note 63(d)(ii) details the gross carrying amount loss allowance as well as the measurement basis of expected credit losses for each of these financial assets by credit risk rating grades
110
International GAAP Holdings Limited
Source International GAAP Holdings Limited
The following table shows the movement in expected credit losses that has been recognised for the respective financial assets
12-month ECL Lifetime ECL ndash not credit impaired
Bills of
exchange
Redeemable
notes Debentures
Loans to joint
venture
Loans to
associates
Loans to other
entities Total
CU CU CU CU CU CU
Balance as at 112019
Increase in loss allowance arising from new financial assets recognised in the year
Decrease in loss allowance from derecognition of financial assets in the year
Balance as at 31122019
Increase in loss allowance arising from new financial assets recognised in the year
Decrease in loss allowance from derecognition of financial assets in the year
Balance as at 31122020
The changes in the loss allowance were caused predominantly by early repayment of the loan by Associate A Limited The gross carrying amount of the loan was CU__ and associated loss allowance was CU__ There was no significant increase in the credit risk since inception in respect of new loans to associates joint ventures and other entities
The loss allowance for the corporate bonds measured at FVTOCI is recognised in other comprehensive income The movement in loss allowance is disclosed in note 44
IFRS 735H
IFRS 735B(b) IFRS 735H
111
International GAAP Holdings Limited
Source International GAAP Holdings Limited
26 Inventories
31122020 31122019
CU CU
Raw materials
Work-in-progress
Finished goods
The cost of inventories recognised as an expense during the year in respect of continuing operations was CU__ million (2019 CU__ million)
The cost of inventories recognised as an expense includes CU__ million (2019 CU__ million) in respect of write-downs of inventory to net realisable value and has been reduced by CU__ million (2019 CU__ million) in respect of the reversal of such write-downs Previous write-downs have been reversed as a result of increased sales prices in certain markets
Inventories of CU__ million (2019 CU__ million) are expected to be recovered after more than 12 months
Inventories with a carrying amount of CU__ million (2019 CU__ million) have been pledged as security for certain of the Grouprsquos bank overdrafts
27 Right to returned goods asset
31122020 31122019
CU CU
Right to returned goods asset
The right to returned goods asset represents the Grouprsquos right to recover products from customers where customers exercise their right of return under the Grouprsquos 30-day returns policy The Group uses its accumulated historical experience to estimate the number of returns on a portfolio level using the expected value method
28 Contract assets
31122020 31122019 112019
CU CU CU
Construction contracts
Installation of software services
Current
Non-Current
IAS 236(b)
IAS 236(d)
IAS 236(e) ndash (g)
IAS 161
IFRS 15B21(c)
IFRS 15126(a) IFRS 15126(d)
IFRS 15116(a)
112
International GAAP Holdings Limited
Source International GAAP Holdings Limited
Amounts relating to contract assets are balances due from customers under construction contracts that arise when the Group receives payments from customers in line with a series of performance related milestones The Group will previously have recognised a contract asset for any work performed Any amount previously recognised as a contract asset is reclassified to trade receivables at the point at which it is invoiced to the customer
Payment for installation of software services is not due from the customer until the installation services are complete and therefore a contract asset is recognised over the period in which the installation services are performed to represent the entityrsquos right to consideration for the services transferred to date
The directors of the Company always measure the loss allowance on amounts due from customers at an amount equal to lifetime ECL taking into account the historical default experience the nature of the customer and where relevant the sector in which they operate
There has been no change in the estimation techniques or significant assumptions made during the current reporting period in assessing the loss allowance for the amounts due from customers under construction contracts
The following table details the risk profile of amounts due from customers based on the Grouprsquos provision matrix As the Grouprsquos historical credit loss experience does not show significantly different loss patterns for different customer segments the provision for loss allowance based on past due status is not further distinguished between the Grouprsquos different customer base (see note 32)
31122020 31122019
CU CU
Expected credit loss rate __ __
Estimated total gross carrying amount at default
Lifetime ECL
Net carrying amount
IFRS 15117
IFRS 734(a)
IFRS 735G(c)
IFRS 735M IFRS 735N IFRS 9B5535
Commentary
IFRS 15118 contains a requirement to explain the significant changes in the contract asset (and contract liability) balance during the reporting period This explanation should include qualitative and quantitative information Examples of changes in the contract asset and liability balances may include any of the following
a) changes due to business combinationsb) cumulative catch‑up adjustments to revenue that affect the corresponding contract asset or contract liability
including adjustments arising from a change in the measure of progress a change in an estimate of the transaction price (including any changes in the assessment of whether an estimate of variable consideration is constrained) or a contract modification
c) impairment of a contract assetd) a change in the time frame for a right to consideration to become unconditional (ie for a contract asset to be
reclassified to a receivable) ande) a change in the time frame for a performance obligation to be satisfied (ie for the recognition of revenue arising
from a contract liability
IFRS 15118
113
International GAAP Holdings Limited
Source International GAAP Holdings Limited
The following table shows the movement in lifetime ECL that has been recognised for contract assets in accordance with the simplified approach set out in IFRS 9
CU
Balance as at 1 January 2019
Net increase in loss allowance arising from new amounts recognised in current year net of those derecognised upon billing
Balance as at 31 December 2019
Net increase in loss allowance arising from new amounts recognised in current year net of those derecognised upon billing
Balance as at 31 December 2020
There has not been any significant change in the gross amounts of contract assets that has affected the estimation of the loss allowance
29 Contract costs
31122020 31122019
CU CU
Costs to obtain contracts
Current
Non-Current
Costs to obtain contracts relate to incremental commission fees of __ per cent paid to intermediaries as a result of obtaining residential property sales contracts The commission fees are the only cost that the Group would not have incurred if the contract had not been obtained Whilst the Group incurs other costs that are necessary to facilitate a sale those costs would have been incurred even if the customer decided not to execute the contract and therefore have not been capitalised
These costs are amortised on a straightndashline basis over the period of construction (in general 2 years) as this reflects the period over which the residential property is transferred to the customer In 2020 amortisation amounting to CU__ (2019 CU__) was recognised as part of cost of sales in the consolidated statement of profit or loss There was no impairment loss (2019 impairment loss of CU__) in relation to the costs capitalised
IFRS 735H IFRS 7IG20B
IFRS 735B(b) IFRS 735I
IFRS 15128(a)
IFRS 15127 IFRS 15128(b)
114
International GAAP Holdings Limited
Source International GAAP Holdings Limited
30 Finance lease receivables
31122020 31122019
CU CU
Amounts receivable under finance leases
Year 1
Year 2
Year 3
Year 4
Year 5
Onwards
Undiscounted lease payments
Unguaranteed residual values ( ) ( )
Less unearned finance income ( ) ( )
Present value of lease payments receivable
Impairment loss allowance ( ) ( )
Net investment in the lease
Undiscounted lease payments analysed as
Recoverable after 12 months
Recoverable within 12 months
Net investment in the lease analysed as
Recoverable after 12 months
Recoverable within 12 months
During the year the finance lease receivables increased for the following reasons [qualitative and quantitative explanation of the significant changes in the carrying amount of the net investment in finance leases]
The Group entered into finance leasing arrangements as a lessor for certain store equipment to its retailers The equipment is necessary for the presentation and testing of footwear and equipment manufactured by the Group The average term of finance leases entered into is __ years Generally these lease contracts do not include extension or early termination options
The Group is not exposed to foreign currency risk as a result of the lease arrangements as all leases are denominated in CU Residual value risk on equipment under lease is not significant because of the existence of a secondary market with respect to the equipment
IFRS 1694
IFRS 1693
IFRS 1692
IFRS 1692 IFRS 77
115
International GAAP Holdings Limited
Source International GAAP Holdings Limited
The following table presents the amounts included in profit or loss
31122020 31122019
CU CU
(Restated)
Selling profitloss for finance leases
Finance income on the net investment in finance leases
Income relating to variable lease payments not included in the net investment in finance leases
The Grouprsquos finance lease arrangements do not include variable payments
The average effective interest rate contracted approximates __ per cent (2019 __ per cent) per annum
The directors of the Company estimate the loss allowance on finance lease receivables at the end of the reporting period at an amount equal to lifetime ECL None of the finance lease receivables at the end of the reporting period is past due and taking into account the historical default experience and the future prospects of the industries in which the lessees operate together with the value of collateral held over these finance lease receivables (see note 63(d)(i)) the directors of the Company consider that no finance lease receivable is impaired
There has been no change in the estimation techniques or significant assumptions made during the current reporting period in assessing the loss allowance for finance lease receivables
31 Leases (Group as a lessee)
Right‑of‑use assets
Buildings Plant Equipment Total
CU CU CU CU
Cost
At 1 January 2019
Additions
At 31 December 2019
Additions
At 31 December 2020
Accumulated depreciation
At 1 January 2019
Charge for the year
At 31 December 2019
Charge for the year
At 31 December 2020
Carrying amount
At 31 December 2020
At 31 December 2019
IFRS 1691
IFRS 1690(a)(i)
IFRS 1690(a)(ii)
IFRS 1690(a)(iii)
IFRS 77
IFRS 734(a)
IFRS 735G(c)
IFRS 1652
IFRS 1653(a)
IFRS 1653(a)
IFRS 1653(j)
IFRS 1653(j)
116
International GAAP Holdings Limited
Source International GAAP Holdings Limited
The Group leases several assets including buildings plant and IT equipment The average lease term is __ years (2019 __ years)
The Group has options to purchase certain manufacturing equipment for a nominal amount at the end of the lease term The Grouprsquos obligations are secured by the lessorsrsquo title to the leased assets for such leases
Approximately one fifth of the leases for buildings and equipment expired in the current financial year The expired contracts were replaced by new leases for identical underlying assets This resulted in additions to right-of-use assets of CU __ million in 2020 (2019 CU __ million)
The maturity analysis of lease liabilities is presented in note 37
31122020 31122019
CU CU
Amounts recognised in profit and loss
Depreciation expense on right-of-use assets
Interest expense on lease liabilities
Expense relating to short-term leases
Expense relating to leases of low value assets
Expense relating to variable lease payments not included in the measurement of the lease liability
Income from sub-leasing right-of-use assets
At 31 December 2020 the Group is committed to CU __ million (2019 CU __ million) for short-term leases
Some of the property leases in which the Group is the lessee contain variable lease payment terms that are linked to sales generated from the leased stores Variable payment terms are used to link rental payments to store cash flows and reduce fixed cost The breakdown of lease payments for these stores is as follows
31122020 31122019
CU CU
Fixed payments
Variable payments
Total payments
Overall the variable payments constitute up to __ per cent of the Grouprsquos entire lease payments The Group expects this ratio to remain constant in future years The variable payments depend on sales and consequently on the overall economic development over the next few years Taking into account the development of sales expected over the next __ years variable rent expenses are expected to continue to present a similar proportion of store sales in future years
Additionally as discussed in note 2 the Group has benefited from a __ month waiver of lease payments on buildings in [A land] and a__ month lease payment holiday on buildings in [B land] The waiver of lease payments of CU__ and the decrease in the lease liability of CU__ has been accounted for as a negative variable lease payment in profit or loss
The total cash outflow for leases amount to CU __ million (2019 CU __ million)
On [date] 2020 [Subsidiary X Limited] entered into a 10-year lease to rent property which had not commenced by the year-end and as a result a lease liability and right-of-use asset has not been recognised at 31 December 2020 The aggregate future cash outflows to which the Group is exposed in respect of this contract is fixed payments of CU__ per year for the next 10 years
There are no extension or termination options on the lease
IFRS 1659(a)
IFRS 1653(h)
IFRS 1654
IFRS 1653(a)
IFRS 1653(b)
IFRS 1653(c)
IFRS 1653(d)
IFRS 1653(e)
IFRS 1653(f)
IFRS 1655
IFRS 1659(b) IFRS 16B49
IFRS 1659(b)(i) IFRS 16B49
IFRS 1653(g)
117
International GAAP Holdings Limited
Source International GAAP Holdings Limited
32 Trade and other receivables
31122020 31122019
CU CU
Trade receivables
Loss allowance ( ) ( )
Deferred consideration for the disposal of [name of subsidiary] (see note 53)
Other receivables
Prepayments
As at 1 January 2019 trade receivables from contracts with customers amounted to CU __ (net of loss allowance of CU__)
Trade receivables
The average credit period on sales of goods is 60 days No interest is charged on outstanding trade receivables
The Group always measures the loss allowance for trade receivables at an amount equal to lifetime ECL The expected credit losses on trade receivables are estimated using a provision matrix by reference to past default experience of the debtor and an analysis of the debtorrsquos current financial position adjusted for factors that are specific to the debtors general economic conditions of the industry in which the debtors operate and an assessment of both the current as well as the forecast direction of conditions at the reporting date The Group has recognised a loss allowance of 100 per cent against all receivables over 120 days past due because historical experience has indicated that these receivables are generally not recoverable
The Group has engaged a third-party supplier to provide relevant economic data for determining the factors that are specific to the debtors the general economic conditions of the industry in which the debtors operate and the forecast direction of conditions at the reporting date The Group has significantly increased the expected loss rates for trade receivables from the prior year based on its judgement of the impact of current economic conditions and the forecast direction of travel at the reporting date There has been no change in the estimation techniques during the current reporting period
IFRS 15116(a)
IFRS 735G
IFRS 735G (c)
Commentary
In addition to the disclosures required in paragraphs 53ndash58 a lessee is required to disclose additional qualitative and quantitative information about its leasing activities necessary to meet the disclosure objective in paragraph 51 This additional information may include but is not limited to information that helps users of financial statements to assess
bull the nature of the lesseersquos leasing activitiesbull future cash outflows to which the lessee is potentially exposed that are not reflected in the measurement of lease
liabilities This includes exposure arising from ndash variable lease payments ndash extension options and termination options ndash residual value guarantee and ndash leases not yet commenced to which the lessee is committed
bull restrictions or covenants imposed by leases andbull sale and leaseback transactions
118
International GAAP Holdings Limited
Where material entities may wish to include a separate line item setting out theamount of goods and services tax recoverable See the example in Note 32 inAppendix 2
Source International GAAP Holdings Limited
The Group writes off a trade receivable when there is information indicating that the debtor is in severe financial difficulty and there is no realistic prospect of recovery eg when the debtor has been placed under liquidation or has entered into bankruptcy proceedings or when the trade receivables are over two years past due whichever occurs earlier None of the trade receivables that have been written off is subject to enforcement activities
The following table details the risk profile of trade receivables based on the Grouprsquos provision matrix As the Grouprsquos historical credit loss experience does not show significantly different loss patterns for different customer segments the provision for loss allowance based on past due status is not further distinguished between the Grouprsquos different customer segments
Trade receivables ndash days past due
31122020 Not past due lt30 31 ndash 60 61 ndash 90 91 ndash 120 gt120 Total
CU CU CU CU CU CU CU
Expected credit loss rate
Estimated total gross carrying amount at default
Lifetime ECL
Trade receivables ndash days past due
31122019 Not past due lt30 31 ndash 60 61 ndash 90 91 ndash 120 gt120 Total
CU CU CU CU CU CU CU
Expected credit loss rate
Estimated total gross carrying amount at default
Lifetime ECL
The following table shows the movement in lifetime ECL that has been recognised for trade receivables in accordance with the simplified approach set out in IFRS 9
IFRS 735F(e) IFRS 735L
IFRS 735M IFRS 735N IFRS 9B5535
IFRS 735H
119
International GAAP Holdings Limited
Source International GAAP Holdings Limited
Collectively assessed
Individually assessed Total
CU CU CU
Balance as at 1 January 2019
Net remeasurement of loss allowance
Amounts written off
Amounts recovered
Change in loss allowance due to new trade and other receivables originated net of those derecognised due to settlement
Foreign exchange gains and losses
Changes in credit risk parameters
Balance as at 31 December 2019
Net remeasurement of loss allowance
Amounts written off
Amounts recovered
Change in loss allowance due to new trade and other receivables originated net of those derecognised due to settlement
Foreign exchange gains and losses
Changes in credit risk parameters
Balance as at 31 December 2020
120
International GAAP Holdings Limited
Source International GAAP Holdings Limited
The following tables explain how significant changes in the gross carrying amount of the trade receivables contributed to changes in the loss allowance
31122020
Increase(decrease) in lifetime ECL
CU
Settlement in full by customers with a gross carrying amount of CU__ that were over 120 days past due
Origination of new trade receivables net of those settled as well as increase in days past due up to 90 days
31122019
Increase(decrease) in lifetime ECL
CU
Customer with gross carrying amount of CU__ declared bankruptcy
Origination of new trade receivables net of those settled as well as decrease in days past due to 60 days
IFRS 735B(b) IFRS 735I IFRS 7IG20B
Commentary
IFRS 735H requires an entity to explain the reasons for the changes in the loss allowance during the period In addition to the reconciliation from the opening balance to the closing balance of the loss allowance it may be necessary to provide a narrative explanation of the changes This narrative explanation may include an analysis of the reasons for changes in the loss allowance during the period including
a) the portfolio compositionb) the volume of financial instruments purchased or originated andc) the severity of the expected credit losses
121
International GAAP Holdings Limited
Source International GAAP Holdings Limited
33 Borrowings
31122020 31122019
CU CU
Unsecured borrowing at FVTPL
Redeemable cumulative preference shares
Unsecured borrowing at amortised cost
Bank overdrafts
Bank loans
Bills of exchange
Loans from related parties
Loans from government
Perpetual notes
Secured borrowing at amortised cost
Bank overdrafts
Bank loans
Total borrowings
Non-current
Current
IFRS 78(g)
122
International GAAP Holdings Limited
Source International GAAP Holdings Limited
Analysis of borrowings by currency
Currency Units [Currency B] [Currency C] Total
CU CU CU CU
31 December 2020
Bank overdrafts
Bills of exchange
Loans from related parties
Redeemable cumulative preference shares
Perpetual notes
Bank loans
31 December 2019
Bank overdrafts
Bills of exchange
Loans from related parties
Redeemable cumulative preference shares
Perpetual notes
Bank loans
The other principal features of the Grouprsquos borrowings are as follows
(i) Bank overdrafts are repayable on demand Overdrafts of CU__ million (2019 CU__ million) have been secured by a charge over certain debentures held by the Group dated [date] In line with the minimum required security the carrying value of these debentures is CU__ million (2019 CU__ million) The average effective interest rate on bank overdrafts is approximately __ per cent (2019 __ per cent) per annum and rates are determined based on __ per cent plus prime rate
(ii) The Group has two principal bank loans
(a) A loan of CU__ million (2019 CU__ million) The loan was taken out on [date] Repayments commenced on [date] and will continue until [date] The loan is secured by a floating charge over certain of the Grouprsquos trade receivables dated [date] whose carrying value is CU__ million (2019 CU__ million) The Group is required to maintain trade receivables that are not past due with carrying value of CU__ million as security for the loan (see note 32) The loan carries interest rate at __ per cent above 3-month LIBOR
(b) An unsecured loan of CU__ million (2019 CU__ million) This loan was advanced on [date] and is due for repayment in full on [date] The bank loan carries fixed interest rate at __ per cent (2019 __ per cent) per annum The Group hedges a portion of the loan for interest rate risk using an interest rate swap exchanging fixed rate interest for variable rate interest The outstanding balance is adjusted for fair value movements in the hedged risk being movements in the 6-month LIBOR rate The cumulative fair value adjustment to the loan was CU__ million (2019 CU__ million)
IFRS 77
123
International GAAP Holdings Limited
Source International GAAP Holdings Limited
(iii) Bills of exchange with a variable interest rate were issued on [date] The current weighted average effective interest rate on the bills is __ per cent (2019 __ per cent) per annum
(iv) Amounts repayable to related parties of the Group carry interest of __ per cent to __ per cent (2019 __ per cent to __ per cent) per annum charged on the outstanding loan balances
(v) (v) Redeemable cumulative preference shares of CU__ million were issued on [date] at an issue price of CU__ per share The shares carry __ per cent non-discretionary dividends and are mandatorily redeemable on [date] at CU__ per share The preference shares do not carry any equity component and are classified as financial liabilities in their entirety At the same date when the preference shares were issued the Group entered into a pay-floating receive-fixed interest rate swap to reduce the fair value risk of changing interest rates The swaprsquos notional is CU__ million and matches the principal of the preference shares The swap matures on [date] To mitigate the accounting mismatch arising on measuring the liability at amortised cost and measuring the derivative at FVTPL the Group designated the preference shares as at FVTPL The changes in the fair value of the preference shares due to the changes in the credit risk do not create or enlarge the accounting mismatch and therefore they are recognised in other comprehensive income and accumulated in the financial liabilities at FVTPL credit risk reserve (See note 46) The cumulative amount change in fair value due to credit risk was CU__ (2019 CU__) The difference between the carrying amount (ie the fair value) of the preference shares and the contractual amount that will be required to pay at maturity is CU__ (2019 CU__) The valuation methodology and inputs used are disclosed in note 63(a)(i)
(vi) Perpetual notes of CU__ million carrying interest of __ per cent were issued on [date] at principal value Issue costs of CU__ million were incurred
(vii) On [date] the Group received an interest-free loan of CU__ million from the government of [country] to finance staff training costs The loan is repayable in full at the end of a two-year period Using prevailing market interest rates for an equivalent loan of __ per cent the fair value of the loan is estimated at CU__ million The difference of CU__ between the gross proceeds and the fair value of the loan is the benefit derived from the interest-free loan and is recognised as deferred income (see note 60) Interest charges will be recognised on this loan in 2020 (CU__) and 2021 (CU__)
The weighted average interest rates paid during the year were as follows
31122020 31122019
Bank overdrafts
Bills of exchange
Loans from related parties
Redeemable cumulative preference shares
Perpetual notes
Bank loans
Breach of a loan agreement
During the current year the Group was late in paying interest for the first quarter on one of its loans with a carrying amount of CU__ million The delay arose because of a temporary lack of funds on the date interest was payable due to a technical problem on settlement The interest payment outstanding of CU__ million was paid in full on the following day including the additional interest and penalty The lender did not request accelerated repayment of the loan and the terms of the loan were not changed Management has reviewed the Grouprsquos settlement procedures to ensure that such circumstances do not recur
IFRS 710(a)IFRS 710(b)
IFRS 718
124
International GAAP Holdings Limited
Source International GAAP Holdings Limited
34 Convertible loan notes
The convertible loan notes were issued on [date] at an issue price of CU__ per note The notes are convertible into ordinary shares of the Company at any time between the date of issue of the notes and their settlement date On issue the loan notes were convertible at __ shares per CU__ loan note The conversion price is at a __ per cent premium to the share price of the ordinary shares at the date the convertible loan notes were issued
If the notes have not been converted they will be redeemed on [date] at par Interest of __ per cent will be paid annually up until that settlement date
The net proceeds received from the issue of the convertible loan notes have been split between the financial liability element and an equity component representing the fair value of the embedded option to convert the financial liability into equity of the Company as follows
CU
Proceeds of issue of convertible loan notes
Transaction costs
Net proceeds from issue of convertible loan notes
Equity component
Transaction costs relating to equity component
Amount classified as equity
Liability component at date of issue (net of transaction costs)
Interest charged (using effective interest rate)
Interest paid ( )
Carrying amount of liability component at 31 December 2020
The equity component of CU__ million has been credited to the option premium on convertible notes reserve (see note 45)
The interest expensed for the year is calculated by applying an effective interest rate of __ per cent to the liability component for the __ months period since the loan notes were issued The liability component is measured at amortised cost The difference between the carrying amount of the liability component at the date of issue and the amount reported in the reporting at 31 December 2020 represents the effective interest rate less interest paid to that date
IFRS 77
IAS 3228
125
International GAAP Holdings Limited
Source International GAAP Holdings Limited
35 Derivative financial instruments
31122020 31122019
CU CU
Derivative financial assets
Derivatives that are designated and effective as hedging instruments carried at fair value
emspForeign currency forward contracts
emspInterest rate swaps
emspCommodity options
Derivative financial liabilities
Derivatives that are designated and effective as hedging instruments carried at fair value
emspForeign currency forward contracts
emspInterest rate swaps
Held for trading derivatives that are not designated in hedge accounting relationships
emspInterest rate swap
The Group has entered into master netting agreements with the following counterparties [state the name] Derivatives subject to offsetting master netting agreements and any collateral pledged or received are presented below
31122020 31122019
CU CU
Counterparty A
Derivative assets
Derivative liabilities
Net amount of financial assets(liabilities) presented in the statement of financial position
Cash collateral (received)paid
Net amount
Counterparty B
Derivative assets
Derivative liabilities
Net amount
IFRS 78(a)
IFRS 78(e)
IFRS 78(e)
IFRS 713B IFRS 713C
126
International GAAP Holdings Limited
Source International GAAP Holdings Limited
The derivative asset and liability with Counterparty A meet the offsetting criteria in IAS 32 Consequently the gross derivative liability is set off against the gross derivative asset resulting in the presentation of a net derivative asset of CU__ million in the Grouprsquos statement of financial position
Cash collateral has also been received from Counterparty A for a portion of the net derivative asset (CU__ million) The cash collateral of CU__ million does not meet the offsetting criteria in IAS 32 but it can be set off against the net amount of the derivative asset and derivative liability in the case of default and insolvency or bankruptcy in accordance with associated collateral arrangements
The derivative asset and liability with Counterparty B do not meet the offsetting criteria in IAS 32 Consequently the gross amount of the derivative asset (CU__ million) and gross amount of derivative liability (CU___ million) are presented separately in the Grouprsquos statement of financial position
The Group did not enter into any other enforceable netting arrangements than discussed above
Further details of derivative financial instruments are provided in note 63(c)
127
International GAAP Holdings Limited
This page intentionally left blank
128
International GAAP Holdings Limited
Source International GAAP Holdings Limited
Accelerated tax depreciation
Deferred development costs
Revaluation of building
Revaluation of financial assets
Convertible loan note ndash equity
componentRetirement benefit
obligationsShare-based
payments Tax losses Total
CU CU CU CU CU CU CU CU CU
At 1 January 2019
Charge to profit or loss
Charge to other comprehensive income
Charge direct to equity
Exchange differences
At 1 January 2020
Charge(credit) to profit or loss
Charge to other comprehensive income
Charge direct to equity
Acquisition of subsidiary
Disposal of subsidiary
Exchange differences
Effect of change in tax rate
profit or loss
other comprehensive income
direct to equity
At 31 December 2020
36 Deferred tax
The following are the major deferred tax liabilities and assets recognised by the Group and movements thereon during the current and prior reporting period
IAS 1281(g)
129
International GAAP Holdings Limited
Source International GAAP Holdings Limited
Accelerated tax depreciation
Deferred development costs
Revaluation of building
Revaluation of financial assets
Convertible loan note ndash equity
componentRetirement benefit
obligationsShare-based
payments Tax losses Total
CU CU CU CU CU CU CU CU CU
At 1 January 2019
Charge to profit or loss
Charge to other comprehensive income
Charge direct to equity
Exchange differences
At 1 January 2020
Charge(credit) to profit or loss
Charge to other comprehensive income
Charge direct to equity
Acquisition of subsidiary
Disposal of subsidiary
Exchange differences
Effect of change in tax rate
profit or loss
other comprehensive income
direct to equity
At 31 December 2020
130
International GAAP Holdings Limited
Source International GAAP Holdings Limited
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes
31122020 31122019
CU CU
Deferred tax liabilities
Deferred tax assets
At the reporting date the Group has unused tax losses of CU__ million (2019 CU__ million) available for offset against future profits A deferred tax asset has been recognised in respect of CU__ million (2019 CU__ million) of such losses No deferred tax asset has been recognised in respect of the remaining CU__ million (2019 CU__ million) as it is not considered probable that there will be future taxable profits available Included in unrecognised tax losses are losses of CU__ million (2019 CU__ million) that will expire in [year] Other losses may be carried forward indefinitely
No deferred tax liability is recognised on temporary differences of CU__ million (2019 CU__ million) relating to the unremitted earnings of overseas subsidiaries as the Group is able to control the timings of the reversal of these temporary differences and it is probable that they will not reverse in the foreseeable future Temporary differences arising in connection with interests in associates are insignificant
IAS 1274
IAS 1281(e)
IAS 1281(f)
131
International GAAP Holdings Limited
Source International GAAP Holdings Limited
37 Lease liabilities
31122020 31122019
CU CU
Maturity analysis
Year 1
Year 2
Year 3
Year 4
Year 5
Onwards
Less unearned interest ( ) ( )
Analysed as
Non-current
Current
The Group does not face a significant liquidity risk with regard to its lease liabilities Lease liabilities are monitored within the Grouprsquos treasury function
As discussed in note 2 the Group has derecognised CU__ of the lease liability that has been extinguished by the forgiveness of lease payments on buildings in [A land]
Additionally the Group has benefited from a __ month lease payment holiday on buildings in [B land] The payment holiday reduces payments in the period to [date] by CU__ and increases in payments in the period to [date] by CU__ The Group has remeasured the lease liability using the revised lease payments and the discount rate originally applied to the lease resulting in a decrease in the lease liability of CU__ which has been recognised as a negative variable lease payment in profit or loss
IFRS 1658 IFRS 739(a) IFRS 16BC221
IFRS 739(c)
132
International GAAP Holdings Limited
Source International GAAP Holdings Limited
38 Trade and other payables
31122020 31122019
CU CU
Trade payables
Of which reverse factoring
Other taxation and social security
Other payables
Accruals
Trade payables and accruals principally comprise amounts outstanding for trade purchases and ongoing costs The average credit period taken for trade purchases is __ days (excluding the reverse factoring arrangements) and __ days (including reverse factoring arrangements) For most suppliers no interest is charged on the trade payables for the first __ days from the date of the invoice Thereafter interest is charged on the outstanding balances at various interest rates The Group has financial risk management policies in place to ensure that all payables are paid within the pre-agreed credit terms
Furthermore in order to ensure easy access to credit for its suppliers and facilitate early settlement the Group has entered into reverse factoring arrangements The contractual arrangements in place permit the supplier to obtain the amounts billed less 05 per cent discount with the amounts paid by Bank A The discount represents less than the trade discount for early repayment commonly used in the market The Group will repay Bank A the full invoice amount on the scheduled payment date as required by the invoice As the arrangements do not permit the Group to extend finance from Bank A by paying Bank A later than the Group would have paid its supplier the Group considers amounts payable to Bank A should be classified as trade payables The reverse factoring arrangements permit Bank A to early settle invoices equal to CU__ per month the maximum amount used in a month during the year was CU__ At the year-end __ per cent of trade payables were amounts owed under these arrangements
The directors consider that the carrying amount of trade payables approximates to their fair value
39 Other financial liabilities
31122020 31122019
CU CU
Contingent consideration
Financial guarantee contracts
The Grouprsquos major supplier Entity A borrowed CU__ million from Bank Z on 30 June 2019 The bank loan has a maturity of 3 years The Group guaranteed this bank loan and in the event of default of Entity A will have to pay Bank Z The maximum Group exposure is CU__ million and the given guarantee covers the time until maturity of underlying bank loan The Group received a premium of CU__ The carrying amount of the guarantee is established as the higher of
(1) amount of loss allowance calculated in accordance with IFRS 9 and
(2) premium received less cumulative amortisation of the premium to date (according to Grouprsquos policy amortisation is calculated on straight-line basis until maturity of the contract)
IFRS 77
5442
IFRS 729 (a)
133
International GAAP Holdings Limited
Source International GAAP Holdings Limited
At the end of the reporting period the directors of the Company have assessed the past due status of the debts under guarantee the financial position of the debtors as well as the economic outlook of the industries in which the debtors operate and concluded that there has not been a significant increase in the credit risk since initial recognition of the financial guarantee contract Accordingly the loss allowance for financial guarantee contract issued by the Group is measured at an amount equal to 12-month ECL Note 63(d)(ii) contains the credit risk rating grades for this financial guarantee contract
There has been no change in the estimation techniques or significant assumptions made during the current reporting period in assessing the loss allowance for these financial assets
IIn both years the amount of loss allowance is lower than the premium less cumulative amortisation therefore no loss allowance was recognised in profit or loss for the financial guarantee contract
40 Provisions
31122020 31122019
CU CU
Warranty provision
Restructuring provision
Restoration provision
Other
Current
Non-current
Warranty provision
Restructuring provision
Restoration provision Other Total
CU CU CU CU CU
At 1 January 2020
Additional provision in the year
Utilisation of provision
On acquisition of subsidiary
Unwinding of discount
Adjustment for change in discount rate
Exchange difference
At 31 December 2020
IFRS 735G(a) ndash (b)
IFRS 735G(c)
IAS 3784(a)
IAS 3784(b)
IAS 3784(c)
IAS 3784(e)
IAS 3784(e)
IAS 3784(a)
134
International GAAP Holdings Limited
Source International GAAP Holdings Limited
The warranty provision represents managementrsquos best estimate of the Grouprsquos liability under 12-month warranties granted on electrical products based on past experience and industry averages for defective products
The restructuring provision relates to redundancy costs incurred on the disposal of [name of subsidiary] (see note 53) As at 31 December 2020 approximately 50 per cent of the affected employees had left the Grouprsquos employment with the remainder departing in January 2020
The restoration provision has been created upon the enactment of new environmental legislation in [A Land] on 15 December 2020 which requires companies in [A Land] to clean up contaminated land by 30 June 2021 and bear the associated costs thereof Management is in the process of clarifying certain aspects of the legislation and therefore the final assessment of costs that the Company will need to incur may change materially based on the outcome of this process Based on the current interpretation of the legislation the directors have estimated a liability of CU__ million In estimating the liability the directors have made assumptions regarding the following local site volume of contamination proximity to approved landfill sites technology available to decontaminate and costs required to dispose of specialised raw materials
[Describe other provisions]
IAS 3785(a) ndash (b)
IAS 3785(a) ndash (b)
IAS 3785(a) ndash (b)
Commentary
Notes 41 to 52 below set out detailed descriptions and reconciliations for each class of share capital and each component of equity as required by IAS 179 IAS 1106 and IAS 1106A IAS 1 permits some flexibility regarding the level of detail presented in the statement of changes in equity and these supporting notes IAS 1 allows an analysis of other comprehensive income by item for each component of equity to be presented either in the statement of changes in equity or in the notes For the purposes of the preparation of these model financial statements the Group has elected to present the analysis of other comprehensive income in the notes
IAS 1 also allows that some of the details regarding items of other comprehensive income (income tax and reclassification adjustments) may be disclosed in the notes rather than in the statement of profit or loss and other comprehensive income Entities will determine the most appropriate presentation for their circumstances ndash electing to present much of the detail in the notes (as we have done in these model financial statements) ensures that the primary financial statements are not cluttered by unnecessary detail but it does result in very detailed supporting notes
Whichever presentation is selected entities will need to ensure that the following requirements are met
bull detailed reconciliations are required for each class of share capital (in the statement of changes in equity or in the notes)
bull detailed reconciliations are required for each component of equity ndash separately disclosing the impact on each such component of (i) profit or loss (ii) each item of other comprehensive income and (iii) transactions with owners in their capacity as owners (in the statement of changes in equity or in the notes)
bull the amount of income tax relating to each item of other comprehensive income should be disclosed (in the statement of profit or loss and other comprehensive income or in the notes) and
bull reclassification adjustments should be presented separately from the related item of other comprehensive income (in the statement of profit or loss and other comprehensive income or in the notes)
135
International GAAP Holdings Limited
Source International GAAP Holdings Limited
41 Share capital
31122020 31122019
Number Number
Authorised
million ordinary shares of CU each
Issued and fully paid
At 1 January million ordinary shares of CU each
Issued during the year
Own shares acquired in the year
At 31 December million ordinary shares of CU each
[Give details of changes in share capital during the year]
The Company has one class of ordinary shares which carry no right to fixed income
Additionally the Company has authorised issued and fully paid __ million redeemable cumulative preference shares of CU__ each classified as liabilities These shares do not carry voting rights Further details are provided in note 33
42 Share premium account
31122020 31122019
CU CU
Balance at 1 January
Premium arising on issue of equity shares
Share issue costs
Balance at 31 December
43 Own shares
2020 2019
CU CU
Balance at 1 January
Acquired in the year
Disposed of on exercise of options
[Other movement]
Balance at 31 December
The own shares reserve represents the cost of shares in International GAAP Holdings Limited purchased in the market and held by the International GAAP Holdings Limited Employee Benefit Trust to satisfy options under the Grouprsquos share options plans (see note 58) The number of ordinary shares held by the Employee Benefit Trust at 31 December 2020 was __ (2019 __)
IAS 179(a)
IAS 179(a)
IAS 179(a)
IAS 179(b)
IAS 1106(d)
IAS 179(b)
136
International GAAP Holdings Limited
Under the Corporations Act 2001 Australian entities generally do not have a parvalue for issued shares and accordingly Note 42 above may not be relevant
Source International GAAP Holdings Limited
44 Revaluation reserves
Properties revaluation reserve
The properties revaluation reserve arises on the revaluation of land and buildings When revalued land or buildings are sold the portion of the properties revaluation reserve that relates to that asset is transferred directly to retained earnings Items of other comprehensive income included in the properties revaluation reserve will not be reclassified subsequently to profit or loss
Distributions from the properties revaluation reserve can be made where they are in accordance with the requirements of the Companyrsquos constitution and company law Amounts may also be effectively distributed out of the properties revaluation reserve as part of a share buy-back Generally there is no restriction on the payment of lsquobonus sharesrsquo out of the properties revaluation reserve However the payment of cash distributions out of the reserve is restricted by the terms of the Companyrsquos constitution These restrictions do not apply to any amounts transferred to retained profits The directors do not currently intend to make any distribution from the properties revaluation reserve
Properties revaluation
reserve
CU
Balance at 1 January 2019
Revaluation decrease on land and buildings
Reversal of deferred tax liability on revaluation of land and buildings
Balance at 1 January 2020
Revaluation increase on land and buildings
Deferred tax liability arising on revaluation of land and buildings
Effect of change in tax rate
Balance at 31 December 2020
Investments revaluation reserve
The investments revaluation reserve represents the cumulative gains and losses arising on the revaluation of
(i) Investments in equity instruments designated as at FVTOCI net of cumulative gainloss transferred to retained earnings upon disposal and
(ii) Investments in debt instruments classified as at FVTOCI net of cumulative loss allowance recognised on these investments and cumulative gainloss reclassified to profit or loss upon disposal or reclassification of these investments
IAS 190 IAS 1106(d) IAS 1106A IAS 179(b) IAS 1677(f)
137
International GAAP Holdings Limited
Source International GAAP Holdings Limited
The reconciliation of movements in the investment revaluation reserve for years 2020 and 2019 is presented below
Investment in equity
instruments designated as at
FVTOCI
Investment in debt
instruments classified as at
FVTOCI
Investment revaluation
reserve
CU CU CU
Balance at 1 January 2019
Fair value gain(loss) arising during the period
Income tax relating to fair value gain(loss) arising during the period
Cumulative (gain)loss on investments in equity instruments designated as at FVTOCI transferred to retained earnings upon disposal
Cumulative (gain)loss on investments in debt instruments classified as at FVTOCI reclassified to profit or loss upon disposal
Cumulative (gain)loss on investments in debt instruments classified as at FVTOCI reclassified to profit or loss upon reclassification from FVTOCI to FVTPL
Balance at 1 January 2020
Fair value gain(loss) arising during the period
Income tax relating to fair value gain(loss) arising during the period
Cumulative (gain)loss on investments in equity instruments designated as at FVTOCI transferred to retained earnings upon disposal
Cumulative (gain)loss on investments in debt instruments classified as at FVTOCI reclassified to profit or loss upon disposal
Cumulative (gain)loss on investments in debt instruments classified as at FVTOCI reclassified to profit or loss upon reclassification from FVTOCI to FVTPL
Balance at 31 December 2020
The following table shows the movement in 12-month ECL that has been recognised for corporate bonds classified as at FVTOCI
2020 2019
CU CU
Balance as at 1 January
Net movement for the year
Balance as at 31 December
Investments in equity instruments designated as at FVTOCI are not subject to impairment
IAS 190 IAS 1106(d) IAS 1106A IAS 179(b)
IFRS 720(a)(vii)IFRS 720(a)(viii)
IFRS 720(a)(viii) IFRS 9B571
IFRS 720(a)(viii)
IAS 182(cb)
IFRS 720(a)(vii) IFRS 720(a)(viii)
IFRS 720(a)(viii) IFRS 9B571
IFRS 720(a)(viii)) IAS 1106A
IAS 182(cb)) IAS 1106A
IFRS 735H
138
International GAAP Holdings Limited
Source International GAAP Holdings Limited
45 Option premium on convertible notes reserve
2020 2019
CU CU
Balance at 1 January
Recognition of equity component of convertible loan notes (see note 34)
Deferred tax liability arising on recognition of equity component of convertible loan notes
Balance at 31 December
This reserve represents the equity component of convertible debt instruments (see note 34)
46 Financial liabilities at FVTPL credit risk reserve
2020 2019
CU CU
Balance at 1 January
Fair value gain(loss) on financial liabilities designated as at FVTPL attributable to changes in credit risk
Income tax relating to fair value gain(loss) on financial liabilities designated as at FVTPL attributable to changes in credit risk
Transfer of credit risk reserve to retained earnings upon derecognition of related financial liabilities
Balance at 31 December
IAS 1106(d)
IAS 179(b)
IAS 1106(d)) IAS 1106A
IFRS 720(a)(i)
139
International GAAP Holdings Limited
Source International GAAP Holdings Limited
47 Cash flow hedge reserve
Foreign exchange risk Interest rate risk Commodity risk Total
2020 2019 2020 2019 2020 2019 2020 2019
CU CU CU CU CU CU CU CU
Balance at 1 January
Gain(loss) arising on changes in fair value of hedging instruments during the period
Income tax related to gains(losses) recognised in other comprehensive income during the period
(Gain)loss reclassified to profit or loss ndash hedged item has affected profit or loss
(Gain)loss reclassified to profit or loss ndash forecast transaction no longer expected to occur
Income tax related to amounts reclassified to profit or loss
Cumulative (gain)loss transferred to initial carrying amount of hedged items
Income tax related to amounts transferred to initial carrying amount of hedged item
Balance at 31 December
Of which
Balance related to continuing cash flow hedges
Balance related to discontinued cash flow hedges
The cash flow hedge reserve represents the cumulative amount of gains and losses on hedging instruments deemed effective in cash flow hedges The cumulative deferred gain or loss on the hedging instrument is recognised in profit or loss only when the hedged transaction impacts the profit or loss or is included directly in the initial cost or other carrying amount of the hedged non-financial items (basis adjustment)
48 Cost of hedging reserve
The cost of hedging reserve includes the effects of the following
bull changes in fair value of the time value of option when only the intrinsic value of the option is designated as the hedging instrument
bull changes in fair value of the forward element of a forward contract when only the change in the value of the spot element of the forward contract is designated as the hedging instrument (consistent with the Grouprsquos accounting policy to recognise non-designated component of forward contracts in equity) and
bull changes in fair value of the foreign currency basis spread of a financial instrument when the foreign currency basis spread of a financial instrument is excluded from the designation of that financial instrument as the hedging instrument (consistent with the Grouprsquos accounting policy to recognise non-designated component of foreign currency derivative in equity)
The changes in fair value of the time value of an option forward element of a forward contract and foreign currency basis spread of a financial instrument in relation to a transaction-related hedged item accumulated in the cost of hedging reserve are reclassified to profit or loss only when the hedged transaction affects profit or loss or included as a basis adjustment to the non-financial hedged item The changes in fair value of the time value of an option forward element of a forward contract and foreign currency basis spread of a financial instrument in relation to a time-period related hedged item accumulated in the cash flow hedging reserve are amortised to profit or loss on a rational basis over the term of the hedging relationship
IFRS 724C(b)(i) IFRS 724E(a)
IFRS 724C(b)(iv) IFRS 724E(a)
IFRS 724C(b)(iv) IFRS 724E(a)
IFRS 724E(a)
IFRS 724B(b)(ii)
IFRS 724B(b)(ii)
IAS 179(b) IAS 182A
IAS 1106(d)
IAS 179(b) IAS 182A
140
International GAAP Holdings Limited
Source International GAAP Holdings Limited
The changes in fair value of the [time value of an optionforward element of a forward contractforeign currency basis spread of a financial instrument] and their related reclassification adjustments and amortisation per risk category is presented below
Foreign exchange risk Interest rate risk Commodity risk Total
2020 2019 2020 2019 2020 2019 2020 2019
CU CU CU CU CU CU CU CU
Balance at 1 January
Changes in fair value of the [time value of an optionforward elementforeign currency basis spread] in relation to transaction-related hedged items during the period
Changes in fair value of the [time value of an optionforward elementforeign currency basis spread] in relation to time-period related hedged items during the period
Income tax related to changes in fair value of [the time value of an optionforward elementforeign currency basis spread]
(Gain)loss arising on changes in fair value of [the time value of an optionforward elementforeign currency basis spread] in relation to transaction-related hedged items reclassified to profit or loss ndash hedged item has affected profit or loss
(Gain)loss arising on changes in fair value of [the time value of an optionforward elementforeign currency basis spread] in relation to transaction-related hedged items reclassified to profit or loss ndash forecast transaction no longer expected to occur
Income tax related to amounts reclassified to profit or loss
(Gain)loss arising on changes in fair value of [the time value of an optionforward elementforeign currency basis spread] in relation to transaction-related hedged items transferred to initial carrying amount of hedged items
Income tax related to amounts transferred to initial carrying amount of hedged item
Amortisation to profit or loss of changes in fair value of [the time value of an optionforward elementforeign currency basis spread] in relation to time-period related hedged items
(Gain)loss arising on changes in fair value of [the time value of an optionforward elementforeign currency basis spread] in relation to reclassified to profit or loss ndash forecast transaction no longer expected to occur
Income tax related to time-period related hedged items amortisedreclassified to profit or loss
Balance at 31 December
IFRS 724F
141
International GAAP Holdings Limited
Source International GAAP Holdings Limited
49 Foreign exchange translation reserve
2020 2019
CU CU
Balance at 1 January
Gainloss arising on changes in fair value of hedging instruments designated in net investment hedges
Income tax relating to gainslosses on hedges of net assets in foreign operations
Exchange differences on translating the net assets of foreign operations
Income tax relating to gainslosses arising on translating the net assets of foreign operations
Gainloss on hedging instruments reclassified to profit or loss on disposal of foreign operations
Income tax related to gainloss on hedging instruments reclassified to profit or loss on disposal of foreign operations
Gainloss reclassified to profit or loss on disposal of foreign operations
Income tax related to gainloss reclassified on disposal of foreign operations
Balance at 31 December
Of which
Balance related to continuing net investment hedges
Balance related to discontinued net investment hedges
Balance related to retranslation of net assets in foreign operation
50 Share‑based payments reserve
CU
Balance at 1 January 2019
Credit to equity for equity-settled share-based payments
Deferred tax on share-based payments
Balance at 1 January 2020
Credit to equity for equity-settled share-based payments
Deferred tax on share-based payments
Balance at 31 December 2020
IAS 1106(d)) IAS 1106A
IFRS 724C(b)(i) IFRS 724E(a)
IFRS 724C(b)(iv) IFRS 724E(a)
IFRS 724B(b)(ii)
IFRS 724B(b)(iii)
IAS 1106(d)
142
International GAAP Holdings Limited
Source International GAAP Holdings Limited
51 Retained earnings
Balance at 1 January 2019 ndash As restated CU
Dividends paid
Net profit for the year
Other comprehensive income arising from measurement of defined benefit obligation net of income tax
Adjustment arising from change in non-controlling interest (see note 52)
Balance at 1 January 2020
Dividends paid
Net profit for the year
Other comprehensive income arising from measurement of defined benefit obligation net of income tax
Adjustment arising from change in non-controlling interest (see note 52)
Balance at 31 December 2020
Included within retained earnings is an amount of CU__ million (2019 CU__ million) that represents unrealised profits arising on remeasurement of the Grouprsquos investment properties
IAS 1106(d)
143
International GAAP Holdings Limited
Source International GAAP Holdings Limited
52 Non‑controlling interests
Summarised financial information in respect of each of the Grouprsquos subsidiaries that has material non-controlling interests is set out below The summarised financial information below represents amounts before intragroup eliminations
31122020 31122019
CU CU
Subsidiary A Limited
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Equity attributable to owners of the Company
Non-controlling interests
31122020 31122019
CU CU
Revenue
Expenses
Profit (loss) for the year
Profit (loss) attributable to owners of the Company
Profit (loss) attributable to the non-controlling interests
Profit (loss) for the year
Other comprehensive income attributable to owners of the Company
Other comprehensive income attributable to the non-controlling interests
Other comprehensive income for the year
Total comprehensive income attributable to owners of the Company
Total comprehensive income attributable to the non-controlling interests
Total comprehensive income for the year
Dividends paid to non-controlling interests
Net cash inflow (outflow) from operating activities
Net cash inflow (outflow) from investing activities
Net cash inflow (outflow) from financing activities
Net cash inflow (outflow)
[Include a similar table for each subsidiary that has a material non-controlling interest]
Further information about non-controlling interests is given in note 21
IFRS 1212(g) IFRS 12B10 ndash B11
144
International GAAP Holdings Limited
Source International GAAP Holdings Limited
CU
Balance at 1 January 2019
Share of profit for the year
Payment of dividends
Balance at 1 January 2020
Share of profit for the year
Payment of dividends
Non-controlling interests arising on the acquisition of [Acquisition B Limited] (see note 54)
Additional non-controlling interests arising on disposal of interest in [Name of Subsidiary] (see note 21)
Non-controlling interest relating to outstanding vested share options held by the employees of [Acquisition B Limited] (i)
Balance at 31 December 2020
(i) As at 31 December 2020 executives and senior employees of [Acquisition B Limited] held options over __ ordinary shares of [Acquisition B Limited] of which __ will expire on 12 March 2022 and __ will expire on 17 September 2022 These share options were issued by [Acquisition B Limited] before it was acquired by the Group in the current year All of the outstanding share options had vested by the acquisition date of [Acquisition B Limited] CU__ represents the market-based measure of these share options measured in accordance with IFRS 2 at the acquisition date Further details of the employee share option plan are provided in note 58
IAS 1106(b) IAS 1106(d) IAS 1106A
145
International GAAP Holdings Limited
Source International GAAP Holdings Limited
53 Disposal of subsidiary
As referred to in note 14 on [date] the Group disposed of its interest in [name of subsidiary]
The net assets of [name of subsidiary] at the date of disposal were as follows
[date]
CU
Property plant and equipment
Inventories
Trade receivables
Bank balances and cash
Retirement benefit obligation
Deferred tax liability
Current tax liability
Trade payables
Bank overdraft
Attributable goodwill
Net assets disposed of
Gain on disposal
Total consideration
Satisfied by
Cash and cash equivalents
Deferred consideration
Net cash inflow arising on disposal
Consideration received in cash and cash equivalents
Less cash and cash equivalents disposed of
There were no disposals of subsidiaries made in 2019
The deferred consideration will be settled in cash by the purchaser on or before [date]
The impact of [name of subsidiary] on the Grouprsquos results in the current and prior years is disclosed in note 14
The gain on disposal is included in the profit for the year from discontinued operations (see note 14)
IFRS 541
IAS 740(d)
IAS 740(a)
IAS 740(b)
IAS 740(c)
IFRS 1219
146
International GAAP Holdings Limited
Source International GAAP Holdings Limited
54 Acquisition of subsidiaries
[Acquisition A Limited]
On [date] the Group acquired 100 per cent of the issued share capital of [Acquisition A Limited] obtaining control of [Acquisition A Limited] [Acquisition A Limited] is a [describe operations of entity acquired] and qualifies as a business as defined in IFRS 3 [Acquisition A Limited] was acquired [provide primary reasons for acquisition of the entity]
The amounts recognised in respect of the identifiable assets acquired and liabilities assumed are as set out in the table below
CU
Financial assets
Inventory
Property plant and equipment
Identifiable intangible assets
Financial liabilities
Deferred tax assets(liabilities)
Contingent liability
Total identifiable assets acquired and liabilities assumed
Goodwill
Total consideration
Satisfied by
Cash
Equity instruments (__ ordinary shares of the Company)
Contingent consideration arrangement
Total consideration transferred
Net cash outflow arising on acquisition
Cash consideration
Less cash and cash equivalent balances acquired
The fair value of the financial assets includes receivables [describe type of receivables] with a fair value of CU__ million and a gross contractual value of CU__ million The best estimate at acquisition date of the contractual cash flows not to be collected is CU__ million
A contingent liability of CU__ million has been recognised in respect of [provide description of nature of obligation] We expect that the majority of this expenditure will be incurred in 2021 and that all will be incurred by the end of 2022 The potential undiscounted amount of all future payments that the Group could be required to make in respect of this contingent liability is estimated to be between CU__ million and CU__ million
IFRS 3B64(a)-(d)
IFRS 3B64(i) IAS 740(d)
IFRS 3B64(f) IAS 740(a)
IAS 740(b)
IAS 740(c)
IFRS 3B64(h)
IFRS 3B64(j)
Commentary
The disclosures illustrated are also required for business combinations after the end of the reporting period but before the financial statements are authorised for issue unless the initial accounting for the acquisition is incomplete at the time the financial statements are authorised for issue In such circumstances the entity is required to describe which disclosures could not be made and the reasons why they could not be made
147
International GAAP Holdings Limited
Source International GAAP Holdings Limited
The goodwill of CU__ million arising from the acquisition consists of [describe factors that make up goodwill recognised] None of the goodwill is expected to be deductible for income tax purposes
The fair value of the __ ordinary shares issued as part of the consideration paid for [Acquisition A Limited] (CU__ million) was determined on the basis of [describe method for determining fair value]
The contingent consideration arrangement requires [describe conditions of the contingent consideration arrangement] The potential undiscounted amount of all future payments that International GAAP Holdings Limited could be required to make under the contingent consideration arrangement is between CU__ million and CU__ million
The fair value of the contingent consideration arrangement of CU__ million was estimated by applying [describe method for estimating fair value]
Acquisition-related costs (included in administrative expenses) amount to CU__ million
[Name of entity acquired] contributed CU__ million revenue and CU__ million to the Grouprsquos profit for the period between the date of acquisition and the reporting date
If the acquisition of [name of entity acquired] had been completed on the first day of the financial year Group revenues for the year would have been CU__ million and Group profit would have been CU__ million
[Acquisition B Limited]
On [date] the Group acquired 80 per cent of the issued share capital of [Acquisition B Limited] thereby obtaining control of [Acquisition B Limited] [Acquisition B Limited] is a [describe operations of entity acquired] and qualifies as a business as defined in IFRS 3 [Acquisition B Limited] was acquired [provide primary reasons for acquisition of the entity]
The amounts recognised in respect of the identifiable assets acquired and liabilities assumed are as set out in the table below
CU
Financial assets
Inventory
Property plant and equipment
Identifiable intangible assets
Financial liabilities
Total identifiable assets acquired and liabilities assumed
Goodwill
Non-controlling interest in 20 per cent of [Acquisition B Limited]
Non-controlling interest ndash outstanding share options granted by [Acquisition B Limited]
Total consideration
Satisfied by
Cash
Equity instruments (__ ordinary shares of the Company)
Total consideration transferred
Net cash outflow arising on acquisition
Cash consideration
Less cash and cash equivalent balances acquired
IFRS 3B64(e) amp (k)
IFRS 3B64(g)
IFRS 3B64(g)
IFRS 3B64(m)
IFRS 3B64(q)
IFRS 3B64(q)
IFRS 3B64(a)-(d)
IFRS 3B64(i) IAS 740(d)
IFRS 3B64(f) IAS 740(a)
IAS 740(b)
IAS 740(c)
Commentary
If the initial allocation of goodwill acquired in a business combination during the period cannot be completed before the end of the reporting period the amount of the unallocated goodwill should be disclosed together with the reasons why that amount remains unallocated
148
International GAAP Holdings Limited
Source International GAAP Holdings Limited
The initial accounting for the acquisition of [Acquisition B Limited] has only been provisionally determined at the end of the reporting period For tax purposes the tax values of [Acquisition B Limited]rsquos assets are required to be reset based on market values of the assets At the date of finalisation of these consolidated financial statements the necessary market valuations and other calculations had not been finalised and they have therefore only been provisionally determined based on the directorsrsquo best estimate of the likely tax values
The fair value of the financial assets includes receivables [describe type of receivables] with a fair value of CU__ million and a gross contractual value of CU__ million The best estimate at acquisition date of the contractual cash flows not to be collected are CU__ million
The goodwill of CU__ million arising from the acquisition consists of [describe factors that make up goodwill recognised] None of the goodwill is expected to be deductible for income tax purposes
The fair value of the __ ordinary shares issued as part of the consideration paid for [Acquisition B Limited] (CU__ million) was determined on the basis of [describe method for determining fair value]
The non-controlling interest (20 per cent ownership interest in [Acquisition B Limited]) recognised at the acquisition date was measured by reference to the fair value of the non-controlling interest and amounted to CU__ This fair value was estimated by applying an income approach The following were the key model inputs used in determining the fair value
bull assumed discount rate of __ per cent
bull assumed long-term sustainable growth rates of __ per cent to __ per cent and
bull assumed adjustments because of the lack of control or lack of marketability that market participants would consider when estimating the fair value of the non-controlling interests in [Acquisition B Limited]
All outstanding share options granted by [Acquisition B Limited] to its employees had vested by the acquisition date These share options were measured in accordance with IFRS 2 at their market-based measure of CU__ and were included in the non-controlling interest in [Acquisition B Limited] Methods and significant assumptions used in determining the market-based measure at the acquisition date are set out in note 57
Acquisition-related costs (included in administrative expenses) amount to CU__ million
[Name of entity acquired] contributed CU__ million revenue and CU__ million to the Grouprsquos profit for the period between the date of acquisition and the reporting date
If the acquisition of [name of entity acquired] had been completed on the first day of the financial year Group revenues for the year would have been CU__ million and Group profit would have been CU__ million
IFRS 3B67(a)
IFRS 3B64(h)
IFRS 3B64(e) amp (k)
IFRS 3B64(o)
IFRS 3B64(m)
IFRS 3B64(q)
IFRS 3B64(q)
Commentary
The disclosures illustrated should be given separately for each business combination except that certain disclosures may be disclosed in aggregate for business combinations that are individually immaterial
The Standard also imposes identical disclosure requirements for business combinations that are effected after the reporting date but before the financial statements are authorised for issue
IFRS 3B65
IFRS 3B66
149
International GAAP Holdings Limited
Source International GAAP Holdings Limited
55 Notes to the cash flow statement
Cash and cash equivalents
31122020 31122019
CU CU
Cash and bank balances
Bank overdrafts (see note 33)
Cash and bank balances included in disposal group held for sale (see note 14)
Cash and cash equivalents comprise cash and short-term bank deposits with an original maturity of three months or less net of outstanding bank overdrafts The carrying amount of these assets is approximately equal to their fair value Cash and cash equivalents at the end of the reporting period as shown in the consolidated statement of cash flows can be reconciled to the related items in the consolidated reporting position as shown above
Non‑cash transactions
Additions to buildings and equipment during the year amounting to CU__ million were financed by new leases Additions of CU__ million in 2020 (2019 CU__ million) were acquired on deferred payment terms the settlement of which are still outstanding at year end
Changes in liabilities arising from financing activities
The table below details changes in the Grouprsquos liabilities arising from financing activities including both cash and non-cash changes Liabilities arising from financing activities are those for which cash flows were or future cash flows will be classified in the Grouprsquos consolidated cash flow statement as cash flows from financing activities
IAS 745
IAS 743
IAS 744A ndash E
150
International GAAP Holdings Limited
Australian entities commonly adopt the direct method of presentation of thestatement of cash flows and in this case are additionally required to provide areconciliation of the net cash flows from operating activities to profit or loss Anillustrative disclosure is included in Note 55 in Appendix 2
Source International GAAP Holdings Limited
Non‑cash changes (Restated)
1 January 2019
Financing cash
flows (i)
Equity component
of convertible loan notes
Acquisition of subsidiary
(note 54)
Disposal of subsidiary
(note 53)
Fair value adjustments (notes 11 12
and 63) New leasesOther
changes (ii)
31 December
2019
CU CU CU CU CU CU CU CU CU
Convertible loan notes (note 34)
Perpetual notes (note 33)
Bank loans (note 33)
Loans from related parties (note 33)
Lease liabilities (note 37)
Bills of exchange (note 33)
Redeemable preference shares (note 34)
Interest rate swaps fair value hedging or economically hedging financing liabilities (note 35)
Contingent consideration (note 39)
Total liabilities from financing activities
(i) The cash flows from bank loans loans from related parties and other borrowings make up the net amount of proceeds from borrowings and repayments of borrowings in the cash flow statement
(ii) Other changes include interest accruals and payments
151
International GAAP Holdings Limited
Source International GAAP Holdings Limited
Non-cash changes
1 January 2020
Financing cash
flows (i)
Equity component
of convertible loan notes
Acquisition of subsidiary
(note 54)
Disposal of subsidiary
(note 53)
Fair value adjustments (notes 11 12
and 63) New leasesOther
changes (ii)
31 December
2020
CU CU CU CU CU CU CU CU CU
Convertible loan notes (note 34)
Perpetual notes (note 33)
Bank loans (note 33)
Loans from related parties (note 33)
Lease liabilities (note 37)
Bills of exchange (note 33)
Redeemable preference shares (note 34)
Interest rate swaps fair value hedging or economically hedging financing liabilities (note 35)
Contingent consideration (note 39)
Total liabilities from financing activities
(i) The cash flows from bank loans loans from related parties and other borrowings make up the net amount of proceeds from borrowings and repayments of borrowings in the cash flow statement
(ii) Other changes include interest accruals and payments
152
International GAAP Holdings Limited
Source International GAAP Holdings Limited
56 Contingent liabilities
During the reporting period a customer of the Group instigated proceedings against it for alleged defects in an electronic product which it is claimed were the cause of a major fire in the customerrsquos premises on [date] Total losses to the customer have been estimated at CU__ million and this amount is being claimed from the Group
The Grouprsquos lawyers have advised that they do not consider that the claim has merit and they have recommended that it be contested No provision has been made in these financial statements as the Grouprsquos management does not consider that there is any probable loss
31122020 31122019
CU CU
Contingent liabilities incurred by the Group arising from its interest in associates [disclose details]
Grouprsquos share of associatesrsquo contingent liabilities
The amount disclosed represents the Grouprsquos share of contingent liabilities of associates The extent to which an outflow of funds will be required is dependent on the future operations of the associates being more or less favourable than currently expected
57 Operating lease arrangements
Operating leases in which the Group is the lessor relate to investment property owned by the Group with lease terms of between __ to __ years with a __ year extension option All operating lease contracts contain market review clauses in the event that the lessee exercises its option to renew The lessee does not have an option to purchase the property at the expiry of the lease period
The unguaranteed residual values do not represent a significant risk for the Group as they relate to property which is located in a location with a constant increase in value over the last __ years The Group did not identify any indications that this situation will change
Maturity analysis of operating lease payments
31122020 31122019
CU CU
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6 and onwards
Total
The following table presents the amounts reported in profit or loss
31122020 31122019
CU CU
(Restated)
Lease income on operating leases
Therein lease income relating to variable lease payments that do not depend on an index or rate
IAS 3786(a) IAS 3786(b)
IFRS 1223(b)
IFRS 1689
IFRS 1692(b)
IFRS 1697
IFRS 1691
IFRS 1690(b)
IFRS 1690(b)
153
International GAAP Holdings Limited
Source International GAAP Holdings Limited
58 Share‑based payments
Equity‑settled share option plan
The Company has a share option plan for all employees of the Group In accordance with the terms of the plan as approved by shareholders at a previous annual general meeting employees with more than __ yearsrsquo service with the Group may be granted options to purchase ordinary shares
Each employee share option converts into one ordinary share of the Company on exercise No amounts are paid or payable by the recipient on receipt of the option The options carry neither rights to dividends nor voting rights Options may be exercised at any time from the date of vesting to the date of their expiry
The number of options granted is calculated in accordance with the performance-based formula approved by shareholders at the previous annual general meeting and is subject to approval by the remuneration committee The formula rewards employees to the extent of the Grouprsquos and the individualrsquos achievement judged against both qualitative and quantitative criteria from the following financial and customer service measures
bull improvement in share price
bull improvement in net profit
bull improvement in return to shareholders
bull reduction in warranty claims
bull results of client satisfaction surveys
bull reduction in rate of staff turnover
Options are exercisable at a price equal to the average quoted market price of the Companyrsquos shares on the date of grant The vesting period is three years If the options remain unexercised after a period of five years from the date of grant the options expire Options are forfeited if the employee leaves the Group before the options vest
Details of the share options outstanding during the year are as follows
31122020 31122019
Number of share options
Weighted average
exercise price (in CU)
Number of share options
Weighted average
exercise price (in CU)
Outstanding at beginning of year
Granted during the year
Forfeited during the year
Exercised during the year
Expired during the year
Outstanding at the end of the year
Exercisable at the end of the year
The weighted average share price at the date of exercise for share options exercised during the period was __ The options outstanding at 31 December 2020 had a weighted average exercise price of __ and a weighted average remaining contractual life of __ years In 2020 options were granted on [dates] The aggregate of the estimated fair values of the options granted on those dates is CU__ million In 2019 options were granted on [dates] The aggregate of the estimated fair values of the options granted on those dates is CU__ million The inputs into the [specify model] model are as follows
IFRS 244 IFRS 245(a)
IFRS 245(b)
IFRS 245(c) ndash (d) IFRS 246 IFRS 247(a)
154
International GAAP Holdings Limited
Source International GAAP Holdings Limited
31122020 31122019
Weighted average share price CU__ CU__
Weighted average exercise price CU__ CU__
Expected volatility
Expected life __years __years
Risk-free rate __ __
Expected dividend yields __ __
Expected volatility was determined by calculating the historical volatility of the Grouprsquos share price over the previous __ years The expected life used in the model has been adjusted based on managementrsquos best estimate for the effects of non-transferability exercise restrictions and behavioural considerations
During 2020 the Group re-priced certain of its outstanding options The strike price was reduced from CU__ to the then current market price of CU__ The incremental fair value of CU__ will be expensed over the remaining vesting period (two years) The Group used the inputs noted above to measure the fair value of the old and new options
The Group recognised total expenses of CU__ and CU__ related to equity-settled share-based payment transactions in 2020 and 2019 respectively
[The disclosure requirements for an LTIP plan are the same as a share option plan and should be inserted here if relevant]
Cash‑settled share‑based payments
The Group issues to certain employees share appreciation rights (SARs) that require the Group to pay the intrinsic value of the SAR to the employee at the date of exercise The Group has recorded liabilities of CU__ and CU__ in 2020 and 2019 Fair value of the SARs is determined by using the [specify model] model using the assumptions noted in the above table The Group recorded total expenses of CU__ and CU__ in 2020 and 2019 respectively The total intrinsic value at 31 December 2020 and 2019 was CU__ and CU__ respectively
Employee share option plan of a subsidiary acquired in the current year
[Acquisition B Limited] has a share option plan for its executives and senior employees The outstanding share options were not replaced and were still in existence at the date of acquisition of [Acquisition B Limited]
Each employee share option of [Acquisition B Limited] converts into one ordinary share of [Acquisition B Limited] on exercise No amounts are paid or payable by the recipient on receipt of the option The options carry neither rights to dividends nor voting rights Options may be exercised at any time from the date of vesting to the date of their expiry All outstanding share options granted by [Acquisition B Limited] had been vested by the date when the Group acquired [Acquisition B Limited]
The following share-based payment arrangements were in existence during the current year
Options series Number Expiry dateExercise
price
Market-based measure at the acquisition date of
[Acquisition B Limited]
CU CU
(1) Granted on 13 March 2019
(2) Granted on 18 September 2019
IFRS 247(c)
IFRS 251(a)
IFRS 251(b)
IFRS 245(a)
155
International GAAP Holdings Limited
Source International GAAP Holdings Limited
All outstanding vested share options were measured in accordance with IFRS 2 at their market-based measure at the acquisition date The weighted average market-based measure of the share options determined at the acquisition date of [Acquisition B Limited] is CU__ Options were priced using a [Specify Model] option pricing model Where relevant the expected life used in the model has been adjusted based on managementrsquos best estimate for the effects of non-transferability exercise restrictions (including the probability of meeting market conditions attached to the option) and behavioural considerations Expected volatility is based on the historical share price volatility over the past 5 years To allow for the effects of early exercise it was assumed that executives and senior employees would exercise the options after vesting date when the share price reaches three and a half times the exercise price
Option series
Series 1 Series 2
Acquisition date share price CU__ CU__
Weighted average exercise price CU__ CU__
Expected volatility
Expected life __years __years
Risk-free rate __ __
Expected dividend yields __ __
No share options were granted or exercised after the Group obtained control over [Acquisition B Limited] The share options outstanding at 31 December 2020 had an exercise price of CU__ and a weighted average remaining contractual life of __ days
Other share‑based payment plans
The employee share purchase plans are open to almost all employees and provide for a purchase price equal to the daily average market price on the date of grant less __ per cent The shares can be purchased during a two-week period each year The shares so purchased are generally placed in the employee share savings plan for a five-year period Pursuant to these plans the Group issued __ ordinary shares in 2020 at weighted average share prices of __ The discount of CU__ million will be expensed over the vesting period of __ years
IFRS 246 IFRS 247(a)
IFRS 245(d)
156
International GAAP Holdings Limited